BOX - Earnings call transcript Q2 2023

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Operator

Good afternoon. My name is Savannah, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Box Incorporated Second Quarter Fiscal 2023 Earnings Conference Call. Today’s call is being recorded. All lines have been placed on mute to prevent any background noise and after the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator now turn would to conference Cynthia Hiponia. like I the to over And ahead. go Please

Cynthia Hiponia

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

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

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

Our webcast audio only. will be

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

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

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

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

Aaron Levie

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

quarter revenue year-over-year. deliver growth to of FY XX% results XXXX, strong continue We in second with

retention and our XXX from drove up sequentially net year profitability focus of on non-GAAP remained both strong XX.X% at increased margin over Gross margins and operating basis XX% sharp a rate year-over-year. XX.X%, ago. Our points

while year, maintaining for our higher current our the confidence Our and increasing us fiscal guidance full FX. impact execution business in momentum the guidance despite gives of revenue EPS

of content our the lifecyle platform. powers the of show a full Content strategy, success which results Cloud single Our in

the three, major urgent with ongoing every work; need aligned process; driving three More digitally to pressures privacy number and two, workstyles; that transform is the business future the trends compliance are to one, strategy of rates. are enterprises. deliver from secure all the of built hybrid of our Our for security, turning on and to was and the XXX%, retention the Content by management Box In the new strong driven working. content prior the collaboration rate net customer Cloud customers in XXX% second up way expansion data year,

in revenue in on large quarter period, with XX multi-product quarter prior the and Suites we new year these plus plus ago, a deals our plus deals XX had $XXX,XXX segment. up from of over this XX being Suites, XX deals, deals $XXX,XXX up XX the Suites in annually, year deals, XX the ago For from prior in $XXX,XXX and

before, and and a cut to landscape work services a today financial don’t ever of value most content technology or than help tools CIOs the are is QX expenses. that to strategic the just business work Our the from healthy the greater supply are more that company workflow that of or the with it’s the that work multitude challenges onboarding highly tools can with company’s with secure, enterprise for the particularly chain, distributed to a every workflows, months the global customers content content enables whether collaborating simplifying is cloud and yet legacy In volume increase Cloud government platforms storage, collaboration The management, a of complicated enterprises that critical across facing. dozens world, workflows have And overcome ever today. a serve environment semiconductor in working. What risks clear offer most are large partners is Content e-signature, metrics, they across dealing content that Enterprises than of reflect to experiencing looking are macro workflows how is platform critical today in for increase fragmented Box different it. their information is IT security anywhere a are in for have all hybrid CIOs enterprises streamlining employees, enterprises. isolate management fiscal past organization, with digital geographies. employees and of nearly mission enterprises results and I spoken customer couple industry of

and of billions of zettabytes In today. of keep portion data XXX every only by to the technology demands will data makes spent within mix The a of this businesses. legacy year on growing, longer problem any there no on this of fragmented estimated it’s And will form fact, XXXX content. substantial are the be the new of is enterprises in tens sense that given going approach be dollars

Box million making keeping can year, annual Examples this of environments, software lowering Box, technology, Plus become and they operations, customers value Box the process its in and information include; and Box compliance. enterprises IT reduce on-premise in purchased part With are has eliminated Box six QX costs the completely how of and QX simplifying support in standardized on utilizing a integral From customer strategic on a services more hardware, maintenance on-site maintaining for remote XXX that by Cloud, security a high to more anticipates strategic, workforce $X their costs, processes, as and while servers level their in seven Enterprise leading their across workflows financial to a homebuilder teams, secure. as and our delivering Box management long-term Fortune dramatically and clear business group million has on figure of estimated who $X sales vendors than redundant A while saving performance eliminate an content storage reps. With this including ELA increasingly a wins, of their Content and customer business. complexity business cost spend decisions disparate digital systems. enterprises it’s cloud

We the to content a future full capabilities of work. major build the power continue single in in our Content and in out platform address trends to lifecycle Cloud the of

capabilities expanding included in upside instantly plans Sign getting and features higher the additional customers will core are and customers value enhancements. API to for from move TAM. up we Box address to more new value benefit rolled our QX a in provide customers out capabilities investments $XX tier product subscriptions as Box Our Box platform Relay, features. These to from substantial In add bundles, and we billion allowing as our Box to additional

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

a content include; in key as purchased company the in who a deal Box real management and development strategy. its customers quarter Second management technology six-figure estate

choose signing As due the customers offering new security quarter sensitive solutions treating around suffering part state authorized leading medical providers to heart already Box’s in COVID. governments receiving our work of for strategy for remain wall development Box the data this and cases as use for for adequate a cybersecurity they A In from critical properties. compliance privacy Cloud. that status to Services patients customers, and the With physicians framework content. support company of support lung collaboration Box to to with Sign additional we Box local Enterprise increasing purchased who StateRAMP, licenses company driver service why Premier was with and are ensures Plus importance security, protection purchased issues capabilities Sign also a their Content wall attained security new to device second and our

group We also security platforms announced integrations, and Splunk, updates include and among These enterprise. and of which to security deepened Program, compliance including together Partner many industry-leading Cisco advance with updates a the brings in new Trust select to our others.

our key Shield compliance, product leading continue extend governance Box and We to in invest will areas like capabilities. security, that

integrate enables use solution Box to workflows of the Salesforce Slack, processes across deep we the QX, is OfficeXXX, to deeply integration Microsoft part rolled Box IBM, and and In out many in that our Zoom, SaaS content to Salesforce for as ability customers landscape more. on for Teams, integrations integral the signature-based the AppExchange enhancements Salesforce. strategy, Finally, platform ServiceNow with the our including an Webex, management

we to Box major second rapidly and most capabilities with improvements October, workflow continue heading. doubling Shield Box compliance our value are to their be a we As the a and and security further reinforce so the a is Content we number and serve Cloud can Sign, Box the these vision have them going making they where our Canvas, the is Governance of the help platform down legacy will half roll-out use-cases. having around updates the they collaboration complex by and BoxWorks, help and they for share and with platform, all process. retire platform At will more in Relay, of of systems, customer’s infrastructure advancements, our our this businesses, platform their look FY our partner extend in Box continue and automate in and continue at What content and streamline announcements ton open major single And integrations. critically, with product globally in scale to help cloud we we common saving customers to Notes in XXXX, of of

customers to of accounted for initiatives related and With increasing our expand on significant organizations number part have support offering, and how productivity which key on more than reduce showing those stack. of an XX% years. seen apps scale focus ago. of of of tech optimized and past to pricing Plus, our multi-product applications We is our in and execute the their key a where deals. Suites continue managing In we to we improvements Enterprise increased our hundreds we QX Suites have cost our complexity content, go-to-market year the we motion, packaging land A Plus couple can launched in and Enterprise

Enterprise Box Our with processes. medical and eliminate use devices figure including a across functions customer power with company pharmaceutical to new six content leverage Plus on-premises Box experiences. the Plus upgrade Enterprise managing an include; supporting They purchased American deal, Box Enterprise them to multinational servers of large figure Platform more will its QX solve new expanded vehicle expansions U.S. and in and based to business A a key regulated support six issues. reliability and sophisticated cases, structured wins with file use retailer Plus enabling customer also

of margins. net for are clear We gross process, It’s value, increased the efficiencies adoption retention pleased total offerings, provides face with our work, important digital customers, a cybersecurity of in our around together hybrid that threats. the multi-product higher never transformation growing our works account world set accelerating and challenges mission sales which our as has more and powering of how enterprises been

best the challenges, these in complexity reducing cost is solve for our platform while to and customers. Our position

we both and operate of want to in Boxers like with work us the a platform Box, how opportunity we our define to Before our the it people our business. strong and continue deliver talent, future Dylan, stay acknowledge what enables off is take ahead to Across to hard I and to hand and focus competition of and for moment our and what have Boxers. customers. the an a in invest our I work culture scale to looks as

business continuing continue even hand for As an enduring hyper over long With run, on to we build focused to I also growth will we deliver to profitability. Dylan. the that, while it driving remain greater

Dylan Smith

another Aaron. revenue Good QX and you marked everyone, end strong the and EPS guidance. quarter afternoon, at with Thanks, our of joining us. business thank momentum, high for of

focus demonstrated year, was net QX and XX% delivered up that quarter we more X key macro a end by headwind out is In remain and in revenue operating laid to up working, Our of financial experienced rate our accelerating delivering offset three to environment, the at prudently that than FY us growth the to year-over-year enabled margins points XX% Strong achieve for that of growth, high FX deal on the $XXX returns. we pacing shareholder and of throughout profitable guidance. negative capital expanding both QX. this year-over-year. Even XXXX and amid margins objectives of revenue complicated the the of this retention million, annual at we on allocating beginning track sequentially gross percentage we optimize

worth XX% high Our XX% rate from closed on up with deals. we Content of customers. attach large deals our QX Suites annually, a these In demand to continues than Cloud generate year-over-year, $XXX,XXX XX platform more

percentage an have our we FX. XX As obligations impact with an Suites, increasingly of to billion, our XX% increase which attributable to Box We adoption critical as seeing revenue partner XX% X products from performance is customers advanced with point XX% year is who a remaining or strong a purchased increase, capabilities. viewed RPO ended ago. Roughly of a now customers, of points percentage exceptional more $X.X our QX year-over-year of from includes negative are

mid billings more $XXX range recognize over grew than our million next of year-over-year, our of XX single-digit to the QX well growth. expect above of XX% We RPO XX% months. expectations

was rate points X percentage currency Our to billings headwinds. growth due negatively impacted by

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

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

public to the to million. margin migration leverage and Once our operating gross our XX% our strategy additional in leverage profitability to forward, demonstrated higher unlock commitment profile. QX Going our $XX long-term will in improve delivering again, we with business increase a income cloud

basis XXX up was from margin recorded ago. operating XX.X% year points a XX.X% the Our we

in positive non-GAAP $X delivered million, from net of our quarter of proud year now We EPS I first income GAAP EPS impact also includes year $X QX, a a ago. $X.XX balance million up turn a flow and up our negative currency of negative achieved ago. cash from $X.XX $X.XX diluted QX are Non-GAAP We sheet. have headwinds. to from to will of XX%

year last XXXX expectations. half the flow from For up free FY of cash we and of of million, $XXX the our of first first generated half ahead

flow ago impacted million In from the we delivered million As last versus quarter, $XX of cash collections in flow our in was mentioned period. QX we cash QX, QX. operations year strong by $XX

lease calculation million $X cash were period. We free of year million of $XX million, last from Capital in year. QX the flow we million in flow in our payments, which free ago cash down include $XX $XX also generated versus

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

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

roadmap, of repurchased allocating maintain our also million. Our increasing repurchase returns generation while flow M&A QX cash cash to In we generation shareholder enables majority balance sheet and to X.X $XXX approximately million shares stock the via our us flow accelerate a product strong enhance for strategy free free our disciplined to programs.

had $XX As of plan. of of capacity current end buyback our the under QX, approximately million we remaining

equity disciplined Our issuance us combined our share approach, robust has to three with shares repurchase reduce allowed total program, quarters. for consecutive outstanding

shares share count and quarters we basic repurchased outstanding and year’s total roughly last As Note have result, we the this the our over turn that million With three by would like XXXX. X to I diluted shares guidance through shares, reduction tender XX our QX fiscal past offer. shares a million excludes to and that, respectively. reduced for

As our FX you which dollar prior strengthened has in know, since year in the announcement international both currencies full of to XX, expected a on resulting even headwind FY XXXX, U.S. QX further versus the May transact and than larger our the XXXX. earnings we business,

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

expected we anticipate QX range. at FX revenue For XX% to end the the approximately $XXX of year-over-year growth impact of high third $XXX of growth to million, revenue fiscal million representing of This quarter rate. X% XXXX, includes this our an

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

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

to FY high of ending to million this $XXX in January maintaining the million, range anticipated X estimate XX, initial approximately FX we the XXXX, impact range. points. year-over-year headwind we currency at XXXX up now XXXX year our FY fiscal guidance, headwinds end $XXX XX% we gave percentage from revenue when FY Including growth to the XXXX the full estimate our For revenue the full of are we be

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

We be basis result XX.X%, XXX year’s expect of XX.X%. point non-GAAP our approximately improvement representing to last XXXX FY from operating margin a

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

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

guidance GAAP an approximately impact expected of XXXX and EPS from non-GAAP FY includes FX Our $X.XX.

year impact full to the XXXX, the we X growth or rate For currency rate. of by approximately headwinds points FY percentage impact revenue to anticipate billings our points more percentage growth our X than

As growth FY growth an growth is expect XXXX to slightly although currency. such, XXXX rate rate, our behind lag our these line rates reported on roughly to we constant be basis FY billings as expected revenue in in

the in our and for expect growth the We be for be rate mid- high-teens to billings single-digit range in high reported range QX to to QX.

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

proud customers, cost while of strategy, to is execution Aaron Cloud are stacks, direct the with remaining focused our continued our while business are seeing in The as momentum Boxers a they their of secure. growth content As their tech complexity look resonating profitability the our reduce strong and we keeping mentioned, platform result we of and Content on year-over-year. improving

from to flow growth outcome target cash our plus XXXX of XXX-basis-point a against revenue our last on way XX%, free FY margin year’s improvement XX%. well are We delivering of

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

Aaron Levie

Thanks, Dylan.

Xth slate partnership PagerDuty Shriners well share will where Content IT Zoom, the investment attendees we others. at it and for wanted Hospitals, Services, of that including and showcase World Cloud This event thousands the USAA be to and we will available as on questions, community major outstanding vision to IBM, will This CEOs as to announcements. tens be Fuel of event HubSpot, share Xth, will attend. will to year will NHL, CrowdStrike, enterprises Before Attendees also product among incredible of hosting we many our from speakers, we and more advancements be an like on another open leaders from be the virtually BoxWorks. and October up hearing of

you Briefing We are p.m. Pacific join also hosting us. on an Time. Product We Investor Xth October at can hope X

would Operator? Now, I Dylan take be and your to questions. happy

Operator

Ader [Operator Instructions] will come William go first Jason Blair. from Our ahead. with question Please

Jason Ader

you. the to That guidance. billings I growth. Hey, number there? was upside Thank curious most a relative Yeah. the guys. of just Where good did am your come on from

Aaron Levie

Sure.

and billings So both really, year. strength we so in have outcome the growing been enterprise saw our SMB the segments, across across nicely both

especially quarter. from of couple pleased FX, So the impact point X that higher a there, really which the included expectations with points outperformance as billings than was our percentage entering a

Jason Ader

you. Got

what So, on a again? basis, was the currency growth billings constant

Dylan Smith

would billings have growth cost the rate on basis. The been XX% currency

Jason Ader

Great. Right.

Aaron, you. just would maybe are Got any you seeing verticals Okay. there specific And like highlight increased are that then you, you where to for momentum?

Aaron Levie

Yeah.

across of we financial verticals, saw manufacturing, kind number think, was a really that a the I of healthy broad-based. momentum pretty life industry, tech sciences, services,

think, it we verticals. wouldn’t I call seeing, So key are a demand healthy outcome, that specific the I of drove a number one meaningfully across but

Jason Ader

Okay. if to you I really in the or any you from there in quick But last that impact one did any I And stuff. in, several any months? one about beyond all is out macro have last macro talk see didn’t vertical? here region mean, the witnessed slip impact seem changes any FX you demand at could there then

Aaron Levie

to In there challenges our do note mean macro Yeah. a with conversations supply and them I have nothing from want was the -- inflation chain that broader and standpoint. explicit businesses. be QX, costs pronounced are macro with dealing customers in to those seeing that while they super we around their are all we

being business. platform streamlining around that the their to advantageous lowering management customers cost -- be in this advant really a for the businesses, can of for in technology, kind really ownership the of set efficiency We be to have really, tried up content total technology to able environment drive

we to kind be for business we to that’s be what up want to So this and set customers drive. our able in environment asset the of an

Jason Ader

cycles or sales that? of anything elongation like no So

Aaron Levie

we Nothing trends or of but pretty QX. in, always pronounced QX, full kind in impact did obviously, note deals quarter see in is of front meaningful for pulled that some the the can that that FX would year. slip then, a on get be And out no we unusual

Dylan Smith

deal Yeah. have as stable, I’d past suite more year. services have say actually, deals past we seen relatively And through remained the cycles even selling we in often our all that, broader change Suites, deal for year, the been cycles over of a really larger haven’t and much at selling

Jason Ader

Thanks, guys. Good luck.

Aaron Levie

Thank you.

Dylan Smith

Thanks.

Operator

And our next question will come from ahead. Ittai Kidron with Oppenheimer. Please go

George Iwanyc

Hi. Hi. Iwanyc. It’s George

maybe can from standpoint on how selling give productivity context is So Canvas up maybe of following based motion sense new your selling going? are and there, you the Sign sales features and a you value the like us comments Dylan, what a of Box seeing and the

Dylan Smith

Sure.

of we in called are again SMB that strength would continuing the that, in out productivity I say trends segments. last So to our year, see enterprise we terms both and

seeing are productivity in improvements salesforce we year-to-date. So incremental

couple years, the of in this very that productivity trends called so gave mid-teens at have driven size the to grow force confidence us of because to the low- improvements and the a of faster year, clip. past sales our we had out that strong over we As percentage range the

turn a make improvements growth you to to of it Aaron of to then the And an if about continuing but I over overall can productivity will salesforce we as there. update from that are bit well. about you coming think think sales you give higher the asked about just to our as bookings capacity, Canvas, So majority

Aaron Levie

winter will we rolling throughout out be -- is fall Canvas customers. Yeah. to Sure. the this and

story a it value a of Sign, have demand So of capabilities one for. on power the integrated in complete that just it platform content to with much of to a forward-looking the an are more of of build much of our overall lot we too these continue wouldn’t helps to product able had core strong excited reinforce the customers again, about. and single platform And impact being results, all platform. the cycle life in super

George Iwanyc

look Dylan, at that up hiring rest overall just when comments, the your are hiring the looking improvement, And you key the year the right. what levers for All at? margin you and maybe on the of are following

Dylan Smith

Yeah.

you of segment there. and would up in or very can as grow highest can being look the by see you focusing leverage expect expect say that trends prudent -- us growth in productivity certainly, by the segment, given us the But the to with investing our the terms to I certainly, we So, in salesforce, we dial we lower been geography see closely as on that, especially go-to-market hiring to such at expenses areas, the doing, locations, company down climate. geography continuing very we Poland. can are and really salesforce current cost have

George Iwanyc

Thank you.

Operator

Our question next ahead. will Raymond go James. Brian Please come with Peterson from

Brian Peterson

get value savings this of come for of up I’d more now I taking to for of guys. macro ways providing, in with that. ago? couple your that often Thanks savings more like years you Box the couple am are a you kind Thanks, like given examples does versus curious maybe environment, Aaron, one there a on remarks and to and Hi. thoughts the customers, your question. are drive And quantitative love so just for in me, mentioned prepared about ROI a of lot

Aaron Levie

Absolutely. Brian. Thanks, Yeah.

about five you years years, modern on three largely sort think ago, I a when and sorry, and takeouts technology think really, years, directly use diametrically, say, four Box, secure of content really we the let’s platform, collaboration storage, management were focused some being for with vendor their with around in of much to our more cases a dozens strategic different content organization. and workflow, technologies we customers, inside advanced cases of management. with security able e-signature, replace become data broader compliance and Today, sharing,

dollars to up, is showing identify are with able Box our on Cloud in help daily customers So areas a of trying or our go-to-market workflow go to to customer that to team, be particular move we basis in where able we that or being customer every a by the certain conversation workload more in and and can Content conversations. save again,

content licenses If vendor, any if just vendor, they would to customer different multiple you you X more didn’t have that into times add the Box. systems up a would technology management technology Box on to a stack a oftentimes tools, collaboration signature could X have dollars use that have or than would the go have spent different that times few be that workflow

do of we so out our offer and help and ROI we that And cost working meaningful those systems. drive customers are to them increasingly complexity fragmented with

Brian Peterson

And that like that pushing up in of nine coming customer even maybe follow-up, up, go-to-market, lot that six like Aaron, it to kind even are than is the you months your a is a conversations more now sounds but maybe months coming ago?

Aaron Levie

way have call qualitatively quantitative talk it’s that value the way save I putting a are would I certainly, total are say, customers, out, of versus particular more think it systems. talking about -- it cost means that these that together of we items, can these spend I to other ownership reviewing CFOs we proposals increasing, which don’t more is with

But of a been as past couple multiproduct the an has that So driving increase. is years strategic the in would this. company I been have exactly bigger a do to transformation just we note platform as

that’s we up number an we the of customers investing investing for years and growth for better -- Cloud Box helping. Content efficiency, just have and a would will think certainly And set so success a is or it’s growth that both But are whether we for think than are environment better where ago. we perform certainly

to and our customers message from in are more resonating So a is strong position think continue this. we I to drive really go and

Brian Peterson

Aaron. Thanks, color. the Appreciate

Aaron Levie

Thanks.

Operator

Stanley. Baer from Please Our ahead. go next Josh Morgan question with will come

Josh Baer

Great. for Thanks question. the

expansion are seat have I just times within a talked seats base, factors wondering, help your was opportunity that Aaron, you some looking opportunity that potential? so could unlock what about ahead, of biggest the Before X

Aaron Levie

Yeah.

the roadmap, like our the Box chokepoint our a pieces kind on content our seats. products single as and at things by will to Box compliance likelihood are continue Box their making space, look we that there’s would increase expand when that we customer help to of security of use want core security. all customers advancements for Shield will So, of Shield, In

access So within happening, environment. for enterprise if seats Box managed gets are anomaly to or your the all about within files be you ransomware the think more detection that shouldn’t improved, attacks that

or we are product and the seats and idea an to that example, you product means retire your that an seats Box. you customers collaboration increases these e-sign get a solutions or Salesforce, go enhance need the solve complete Sign, collaboration Each the things that integrations Microsoft Box. And capabilities the to increases Similarly, Canvas need making updates the e-signature Notes Box equally can to management with then core that. every add can organization. will so or as license API well, platform the all for and our more of other more or things our seats is Box in Box new improvements all Slack that imagine Box workflow, more strategy seat our Box around you and license like content Box that as functionality. the to And likelihood on within for Box like Teams add security for on our

expansion well. structures. for packaging unannounced, of I help drive are geographies likelihood to up with able And more calls think, kind engine in very about teams, kind expand and come to capabilities then customers to to So be starting set our our about we if the us as the helpful deploy of Box of think departments, more first is you those as efficient our in on many just a very product we but us have that more seats is the customers their to strategy, enterprise-wide becoming our that talked anecdotes all really past, on and kind pricing One of seat earnings road ELA thing to has point to better will side, organization. the more map of go-to-market whole want increase each

easy entire customer is that able deployment licensing. Box, to organization to across with do lot efficiency it of them that can their for a very and their ramping a make be of we So volume

we all So licensed and of packaging seeing to Box customers of do then their Obviously, that an some have as features our all we got elect deploy customers fully entire and so Enterprise also are pricing trends Plus will ELA gets where organization. to Plus Enterprise and with helps.

go-to-market have to our can reasons think, across customers that going upside. road even So deploy why product Box efforts to between map, are our their we seat and capture more I organization

Josh Baer

Thank very much. Great. you

Operator

will question Craig-Hallum. Mattiacci next with Our come Nick Instructions] [Operator from

Nick Mattiacci

Chad Thanks Nick our Hi. on questions. for taking Bennett. for This is

Japanese currency you then headwinds, there thoughts the Suite you your from could and of business ahead is market Japan? and apart guess, in I do performing So, attach demand how how speak rates much environment, you to the just the opportunity your see on in

Aaron Levie

well obviously, to improve. to continues continued amidst, do face very there. that Japan even Yeah. perform we the FX headwinds attach has Suite rate

the with around sales support to Enterprise Our there bringing rhythm our their of the -- certainly customers and team. Plus gotten channel the have are over partners built message

in still So overall are the I Japan think trends strong.

But aware in even certainly has business factors the so the that are Japan. resilient amidst We far. are remained that of macro happening

Nick Mattiacci

that and what to and you with appetite And comments valuations? the private to your have similar does seeing to platform to it. then M&A then translate most the as far to add you I sense share on deals market as makes Sign, with Got any are willing of you are success guess, how next Box do what kind the seen

Aaron Levie

Yeah.

of Box able acquisition how integrate company. Box be the wants So Sign sort for case to to us into drive study the M&A is for and

We and in this accelerates e-signature Box similar can in that that sense to our identify of into of example technology we entry rapidly our space. we a i.e., certainly, incorporate point was able that a fantastic other a customer bigger being examples, but case into that the market, Sign Sign Box at of then a that. But Box out looking to. roadmap, demand one being ones have can having

strong fairly So think, remains, success. appetite our for that repeating I

do generally many organic of of Our bias to development these is new still capabilities.

highly we However, accelerate do, to again, do trend need when a measured into appropriate. surgical be very M&A where will entry and that we disciplined identify market we

our other call the Star to of to we at an This if this than acquire. what certainly do and technology do more we have really and strong deals. kind tuck-in deals. selective are that of really, going incredibly just roadmap to a note we when additional nothing to is time But were roadmap for if we So might I us sort is we be North out attractive environment will

Dylan Smith

our as to focused that, strategy, accelerate disciplined part teams new M&A that of reset wouldn’t about we we that to on we approach, us focused material of our in are M&A asked in categories. move on build on having us And valuations. versus in and going seeing to valuations, especially seen private transformative Yeah. product the about very really really Dylan, think the because those Certainly, impact this to that’s into and late-stage market. as a technology a pretty is have roadmap kind what market on But with direct you I just the are totally that are allow going

one our strategy. impact but on wouldn’t it’s So I that certainly that about watching, we M&A stated think a are having as real

Nick Mattiacci

Thank Understood. you.

Operator

And our go from come Please question Erik final Suppiger Securities. ahead. JMP with will

Erik Suppiger

in. the Yeah. said quarter when you, for a was Can headwind for have headwind Aaron. Yeah. Thanks you last me I you X%. FX XXXX then you us fitting us for Dylan, for guidance was and gave the follow-up tell what

Dylan Smith

Sure. Yeah.

So you growth, Erik? for our revenue mean

Erik Suppiger

Yeah. Yeah.

Dylan Smith

Yeah. Sure.

about to for quarter growth, you be expect expectations were So our roughly percentage full a X%, quarter-on-quarter see headwind that headwind year X% points so Last revenue that as we incremental X to impact. FX. from of said,

Erik Suppiger

customers and of to its that Plus, how upgrade with and is upside for opportunity course limited think, run I kind expand of was the this that Enterprise correct, the is somewhat left Aaron, on it pricing point price was lifts at XX% continue to you said new is correct, upside, enterprise sales as if or has size here? there then, of for deal And is much Okay. business

Dylan Smith

Yeah.

this is Dylan. So,

the Plus the suite deals total in Suites Plus. seeing our which more those is as we First, were we momentum deals of been were have while really Suites, that are about we as we to Enterprise suites have it of And still of Enterprise that relates to QX, in deals, out, larger the revenue XX% upside, XX% sold then that of attributable called XX% to customers. than the clarify, metric the we pleased with

pretty So to also expansion years, coming be that are note of Suites, in run the the on tend majority And revenue. quite once significant a opportunity. bit we of customers to a even we to significant room our that see expect I’d would

higher category strongest In by the than driven strongest fact, any expansion of the retention relative rate the customers. is net and retention other both relative

So a contract we average by into there, Suites both do once more and Suites, bit more on customers values improve too. have overall headroom room then pricing even to and of and of our converting quite

Erik Suppiger

you. Very Okay. Thank good.

Dylan Smith

Yeah.

Operator

Cynthia over this back at like Hiponia turn remarks. to time, for And I’d to closing the call

Cynthia Hiponia

-- forward on up this next everyone to Great. for look updating afternoon Thank you joining us we and you our call. look

Operator

your Thank you for today’s conference. may you And now conclude disconnect. participation will this and

Box (BOX) 25 Aug 222023 Q2 Earnings call transcript