- Earnings call transcript Q3 2023

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Operator

Ladies and Gentlemen, thank you for standing by and welcome to the Box, Incorporated Third Quarter Fiscal 2023 Earnings Conference Call. All lines have been placed on listen-only to prevent any background noise. After the prepared remarks, there will be a question-and-answer session. [Operator Instructions] At this time, I would like to turn the call over to Cynthia Hiponia, Head of Investor Relations.

You may begin.

Cynthia Hiponia

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

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

will Following our being and at our also will www.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.

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

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

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

Aaron Levie

third XX% on thank the or constant today. year-over-year for growth and call We with basis. strong all Cynthia, Thanks, you revenue XX% joining delivered results, of a quarter currency

up slightly rate the profitability a at our points increased over XX.X% margins of XX%, drove year period. basis remained non-GAAP retention on XXX focus sharp XX%, net versus ago. strong Gross margins from record year-ago while Our operating

increasingly are improvements, pleased year-over-year difficult environment. We quarterly line with results the particularly these bottom our substantial and given macro

businesses. are all enable are while small, and opportunity technology talk dozens business with and complexity nearly technology every IT increasingly companies strategic across to QX that significant I've in to sector My workforce, their of couple for reduce of seeking secure CIOs enterprises months, that of speed had and last companies keeping and allow CEOs the the and large with chat to it's serve Over clear stacks dynamic very that pressures, in from customers, time, them priorities conversations nearly remain dealing the any their operate while them. you confirm to a at results their prioritizing threats. and the better an initiatives These customer today. with of that drive every to mix same and companies across or of our environment agility, distributed their top needing economic leader companies industry, a In transformation front complex are facing

technology to of which and to improving include, governance So, with to while implemented customer making level risk important compliance. by shares while QX of position to purchased network in Plus center into and data ongoing of redundant content far consumer to to complexity the and in productivity Examples their decisions saving includes of Plus and help in to year, of position the At every for or assets goal systems Box require and their leader Content and goes most Box it's collaboration shares secure into M&A that Content activities from best client enterprise media sensitive data up content while a Enterprise company plan content. content enterprises The cost might millions seven-figure a the life-saving dealing and protecting digital dollars Enterprise future of is Cloud a security file companies customers down reduce are on Despite A to one Cloud long-term with network future-ready. is support technology double business legacy reducing become cost adding for types our work reinforcing geographies, a the stack, each and to spend. breakout point leveraging complexity that in drive go how entertainment also film, they single content of platform, several workforce protect, a and goes most innovation their or life Box by drug work. Box are and maintaining to product, platform budgetary producing Box double customer, creative protection consolidating into high and the Box's data BoxWorks risk pressures, productivity their Microsoft and and creates customers major verticals third-party helps cost data. across and scrutiny new files reduce lowers global cloud the need and Box, ultimately budgets QX, clear blockbuster at work solution. wider with future increasingly and are onboard processes, the used In solutions, runs of ELA substantially This a critical that traditional our and fragmentation tools reduce the We been in more strategic property. our are companies more enterprises help enterprises scan powering on it's Shield Yet address on than their more in we security who producing share shared hybrid protect QX, risks, down file content. M&A. malware content. Box ability admins than file to strategy, and today productivity, full by content project a Shield, global new process. in has this trends to types, of the vaccine, to tighten unveiled a retire and years, commitment which see research supporting XX customers new enhancements signature how deep The a in they the Whether our and Office, unique may In that to IT and helping on October. a a file business across we additional to that mix management the some we've significant solutions. into security capabilities flagship Governance, Box major continuing intellectual apply deals in we QX we Box larger manage of a the we With a cycle of scan extended value including variety save drove delivering

announced out into come more making signature enhanced and management, reporting enterprises for around documents Box to wide Box business use Canvas, and our And being online to easier launched our accessed, Governance information launch support with more. and whiteboarding enhanced Box announced in the legal customers a move financial and content and more. of These Box communication visual between Across that beta in-flight, insights transactions is content to industry this better creates new their tool, real-time the finally, publish we in be disposition notes serve prevent hold conflicts of of cases, their the quarter. wall and interest used flexible ethical We and services. our and reinforced to to for to collaboration organizations added the also experience signature signer to ability customers for help within capabilities to exchange and lead consumed Box can could the have This information announced content And requests begin users an for to we in workflow additional ensure groups. insights to improved under roll availability of signature, barriers much insights or retention we especially will content general Sign which more export Shield, cloud. improvements and our collaboration all-new We safeguard to future of for legal efforts, which advanced how information, enjoy insider capabilities we and virtual providing rich it capabilities policies to leveraged of range users include collaboration project intelligence.

now in shared select use governance, together. Cisco's Google Box joint to Webex Box. and customers Cloud, secure for joint in Jeetu feature, one enables customers within directly of across the about all COO Zoom. enterprise. Webex to And enterprise-grade modern And Box us Finally, and on At our can launched compliance an Arvind Box manage customers. transformation security, better ability Kirk companies. Thomas digital pleased has Group with IBM's the CVP ongoing our integrate and of build discussed openness for that SaaS have strategy and a to Krishna, interoperability drive leading and to deeply importance is how and Box our Patel, of our Google we enables content their Box's technology collaboration more enhanced are can recordings of Collaboration spoke and and new how at interoperability Box partnered part IBM discussed enabled collaboration customers maintaining we finally, Experiences CEO how this the EVP that to and Zoom app product Microsoft landscape, BoxWorks, Security recently, automatically critical strong partnership of while With partnerships & the Zoom Devices Kurian, Microsoft. the place, with Koenigsbauer, CEO,

Now tools more to customers with drive ever, looking not partner greater efficiency, platforms, user and are than point them help to security. experience

QX next and threat we'll dynamic our drive into Governance very landscape, all three and security efforts compliance of enhancements our customers into map Shield on in ever doubling in head and the be major delivering and across we and ambitious we'll year, down road a innovation. extend out governance As Box compliance, new to core to Across security looking protect pillars leadership we've had. most be

capabilities main further be year processes, parts deepening And a developer relay on Box and experience integrations the efforts innovation, our Sign Salesforce will we'll more for laying application major within and our features our much continue and to development Canvas, to Notes core out driving Teams, into our of our and to enhancing major publishing like richer with advanced addition more. Box of Slack, workflow management We user adding other advanced and content to experience, UI improvements platform, down product groundwork support scalability content web signature third-party other building like applications double of in and Elements, more. Zoom,

successful Enterprise our launched increase seen large in we've brings of higher we've Cloud shared, in just suite is most suites simple And We Plus offering suite And just date. represent renewal over become QX, ePlus of In of Plus, our strategy sales are of of and Box's value Content multi-product the our the overall over launch As the XX% bring uptake a Enterprise Plus XX% we a from a ago, year teams the our company Box product Enterprise motion full into to and now efficiency our up Suites customers. go-to-market key a to our product from and it customers. bundle. to advanced deals. sales has of tremendous deals, comprised rates And full capabilities year come to our XX% rates. large seeing ago. ePlus our than renewal suites

customer, talent integral been QX become new a sports Enterprise strategic management a and business. of a Our company, QX has Plus part customer expansions an include more longtime Plus as has ELA Box marketing who in Enterprise and with Box wins their purchased and

will current with Box’s records proof APIs, upgrade, they to services running the claims systems and e-signature attacks content threat to as to Box themselves replace Enterprise proving organization system. detection. this will replacing deal well with sensitive on-premises information. with A and concept, Box been purchased now Shield agents. use store provider from using businesses entire on QX. Box With selected insurance for Box work after be financial six-figure legacy back-end and on client safeguard malware they have the of layer Prior as Box of thousands be health company protect Plus need for PHI and in on their cyber and several in providing their Sign a as Box, recognize their they their out working And using a to cases They to

margins adoption adopts retention, pleased earnings multi-product our higher are last a as total and offerings, We greater we more and environment we In the with we strong account are our call, macro of our higher pleased sales efficient increased. Plus, FX a value, process. know QX. when strong have Enterprise a net that customer delivered see gross summary, have headwinds Since to continued

to committed of to continue. security the operating accelerating. their work discipline XXXX are been Operational and The how cyber and target. our of remain demonstrated rethink confluence these only with margin operational significant into company, FY we our of transformation core proud are enterprises they that margins And work, content. is to digital our operating built we our the QX However, and remote margin causing challenges trends improvements, has discipline led will record

uniquely this Box to confident gain are is positioned from We shift.

dynamic record the next commitment over it again QX billion We driving operating as gross hand that, remain to Our market, our and Box once I'll focused on a to profitability. revenue. hyper Dylan. margins very increasing profitability and look demonstrates in growth to $X With we of

Dylan Smith

beginning everyone, strong in above QX that track FY thank quarter challenges, macroeconomic our FX out Thanks, achieve revenue another we're joining we you allocating Box, Aaron. basis, delivering the to from year; flow Good afternoon operating key financial basis and cash margin improvement operating to outcome plus and XXXX accelerating of revenue with for target our EPS annual at growth XX%, a was XX%. free committed for on the guidance to FY us. a line XXXX remain growth against Despite We of point margin and laid for and with on guidance. this shareholder capital three constant expanding currency objectives margins of prudently year's XXX our to returns. last and revenue optimize

financial percentage discipline free and flow this operating and to Our of expand operational testament resilient our we delivered in XX% year-over-year. revenue our we line $XXX in ability a X up that X our was is QX, we headwind In model. our despite guidance when million, we margins on environment of to point was points cash expected margins with QX, set higher which QX This in call. FX experienced guidance than the

than and now closed improve we During that the larger rates in scrutiny worth annually, representing began paying noting an continued in ago our on to impact remain total have seat increase. our per win environment. a average XX QX. customers We year-over-year It more than XX% macroeconomic from year-over-year period. In versus unchanged to due X,XXX year worth more price $XXX,XXX being is XX to placed see annually deals QX, $XXX,XXX QX, customer additional the we deals

ended a environment. dynamic or year to XX% Box XX% Roughly an has purchased of significant albeit attach billion, QX basis. attributable in We currency simply, strong Performance a a have year-over-year ago. on $X.X drive from a also constant Remaining growth to continue to increase now execute Obligations, rate of is of these XX% of large deals. with or revenue Suites Suites, XX% percentage point XX We increase our well, Put who XX% a RPO, customers continued

expect grew billings of our high XX of of next this We point rate. guidance FX, RPO We $XXX X than growth of in a our from was which guidance. over outcome more XX% despite million our higher XX% better-than-expected recognize to our billings well year-over-year, the single-digit anticipated drove QX ahead an percentage X months. headwind than points

increased early and durations. QX outcome was strong payment Our to due in strong renewals billings

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

demonstrating in roughly annualized expect net stronger churn rate with product X% QX, the to rate to In year, our X% our full we Our X% versus at XXX%. prior churn full be was remain retention stickiness approximately customers. and

and well million price expansion leverage a headcount operating retention customers in year-over-year, impact macroeconomic QX We as from reflects income up exceeding as the came demonstrated Suites points. XXX as to uncertainties. our seat up delivering basis lower adoption. we by the running of fully expect XX% higher the profit due XXX seat and year the impacted as in segments with will revenue to strong Once million. QX a amidst XX.X% we gross again, our certain ago. of XX% to by result rate commitment efficiencies in growth transition increase $XXX been was in our per to business higher net basis public profitability $XX anticipate points cloud, XX.X%, be at reduce rates, we will we've This Gross in that margin budgets generating

up significant of $X.XX sheet. end diluted despite Our flow in period. negative our the cash we year calculation, record in from QX operations of year to the $X.XX balance of a and above generated Capital a delivered non-GAAP million, a of QX, In year and of impact We XXX we from points which last EPS from XX.X% was $XX were $XX million, year I'll we from $X.XX operating include turn $XX now the million the million up down currency In from million flow free basis cash year. lease period. cash high delivered headwinds. ago QX, free our guidance, $XX in in margin our versus XX% of cash we flow ago in improvement $XX ago. $XX ago from a XX.X% delivered QX, payments, flow million

turn in quarter cash, ended allocation In restricted total for investments. equivalents, million cash now and repurchased the with approximately to we strategy. Let's million. million $XX $XXX QX, We our shares cash short-term X.X

a We we've quarters. shares result, to As our returning for weighted been to diluted remain basic opportunistically outstanding able reduce committed to consecutive six and capital shareholders.

Directors Board stock a $XXX plan. As authorized new such, our of repurchase recently million common

to QX our US XXXX. growth road transact guidance a to program, and fiscal enhance which leverage to stock addition headwind to and the and generation will invest FX to like business, balance our international our strengthened key we initiatives to which year In strong for the XX, we flow QX our our cash currencies in opportunities, continue both XXXX, accelerate would prior The in map. I turn resulting strategic versus dollar M&A full and that, tuck-in on robust With fund sheet earnings FY increasing announcement and to in repurchase significantly XXXX. product of following our August larger-than-expected

of the includes revenue one-third yen. of impact is in generated currency primarily US, expected present our guidance FX foreign the As headwinds, rates. of assuming exchange The following approximately outside a reminder, Japanese

some contend we constraints. performance FX deals, seeing our reduction scrutiny has companies additional budgetary headwinds, of headcount larger in as business offset are strong with year our largely these While this and

these adjusted these of we guidance pressures, revenue FY to prudently and result macroeconomic reflect dynamics. intensifying a XXXX our As FX have

growth to million, the revenue points we growth million percentage representing XX% high For volume results, of X FX on includes $XXX an quarter an billings rate expected this approximately of strong XXXX, to fiscal be of impact the percentage anticipate as-reported FX XX% rate. year-over-year range. Based including of our This impact X at our billings FX QX impact the of roughly fourth QX early revenue $XXX to points. now the contributed to QX of on expect approximately renewals expected and basis, increasing an we that our growth end

growth anticipated RPO and higher be expect QX our growth slightly our We billings than QX rates. to revenue

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

the to diluted respectively. range We increase and the of year-over-year range expect a to to Weighted and are XXX in $X.XX XX% of $X.XX. basic $X.XX representing XXX to our expected average and million non-GAAP $X.XX, the approximately to high be EPS range the be end at shares be GAAP million, in EPS of

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

year-over-year FY fiscal or constant we For $XXX full range XXXX XXXX, growth anticipate currency now the XX, million, to $XXX XX% be in million revenue basis. the our representing year January ending of on to a XX%

from FY a our non-GAAP of result XX.X%, guidance reiterating basis are operating margin year's approximately XXX of We representing last improvement XXXX point XX.X%.

deliver We of are raising GAAP range $X.XX XXXX of the to non-GAAP to we prior $X.XX. first diluted up to average the be basic EPS our our shares to $X.XX, million, Weighted to in year expect and respectively. and in million expected be approximately positive year, $XXX EPS in full $X.XX of range from are FY and $XXX the $X.XX

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

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

growth slightly line expect roughly an as-reported billings be it growth While on currency, to rate we XXXX we our revenue in expect FY lag with constant in basis. to

modeling purposes. for it on are we we for FY FY formal guidance providing While would XXXX, notable provide thought to yet be helpful items two XXXX color not

previously, our centers. unlock existing we data financial discussed leverage gross will long-term once profile migration co-located As exit and our significant margin cloud our strategy we've public fully

XXXX. in Our center half of expenses redundant public data peak FY first and will cloud the

XX.X% a by During points we QX to and gross QX just hundred of year, couple next basis dip the reported. of from we margins expect

basis with results XXXX a end reported. above the to gross just expect hundred we margins FY points few We

next before expansion We gross year-over-year of year in margins to impact to year with operating flow margin through full resulting QX experiencing a the headwind this XXXX. and rebounding, for QX temporary FY expect operating margin

a operating public will with growth next the after margin transition to year exiting even better to model result, we cloud. delivering As as completing an important positioned continue Box be profitable scale, stronger this

the due roughly of we've movements the to foreign we basis we year. revenue FY to for growth the rates, current year's exchange growth. be the quantify in At basis next material it seen expect a throughout to Additionally, would XXXX, as-reported FX on point an impact year think revenue helpful full the first headwind XXX with half of pronounced FY on impact XXXX more a of spot

QX custom, in Boxers of As on FY its economic our our have environment. focused XXXX like with how executing to earnings we guidance who call. will fiscal are detailed we dynamic close is been our proud would I on provide

costs the their and We life while allows entire threats. have lowering leading cycle created from secure content their cloud enterprises keeping of that enterprises manage platform content the to

Operator? billion to the deliver toward we uncertain that, financial macroeconomic We positioned on stakeholders and to operating achieve generating this key your questions. as Aaron revenue. be To customers objectives and model to business take we the $X growth, it all next value will I as allowed FY well deliver cash With scale and continue for XXXX, are in to of our in while happy our environment up, to sum are flow us our track resiliency free expanding has and three revenue margins. to strength

Operator

line questions. for now [Operator Raymond is first Instructions] floor your of from James. Your Brian Peterson question of open The the comes

Brian Peterson

for Thanks the gentlemen. Hi, taking question.

the if I little increased to an commonality that you end scrutiny. or where So start deal on extending that And Or comments made impacted maybe that? net to kind in new? bit upsell more there's of or I'd also you the cross-sell or was saw markets well? a dynamic love was customers cycles wanted as off understand on about maybe any

Aaron Levie

on front. brought is Yes. impact healthy This saw customers. or the one that some about pronounced demand We quarter, a way Aaron. We and kind new so that were some Sure. pretty new we another new in of the not of of the net actually logos on happy

going deal was and in anticipated. callout maybe a some more budget in in or segments, the business be our larger initially In out cases, higher deal the get make segments -- lengthen, still business. we Overall, in that cases, about not throughout think, And quarter. we're we I think I these than customer which need for more kind we're of kind across what there to as segments many kind in pretty we of some means about But, pretty seats companies not see obviously that we of they're could made happy some software were were pressure, able demand pushed the which hiring can some people, in deliver of the that smaller but the you was narrow cycle of many happy as of board. customers. healthy sectors, the examples overall, saw to maybe

Dylan Smith

contribute in a about to new with see build Brian, and those balance of then that XX% bit, to our XX% about And to to performance segments are question main pretty across the net quantify on being QX bookings new fairly of logo, just did SMB. And consistent, our business, similar continue two of enterprise we customer the that the expansion. the

relative that So pretty seen consistent past. with the the contribution we've in

Brian Peterson

No, drive considering think to a next just We guys. you all most the last going what's what macro. two, get in just that times over year question. that's be that that's had in to billion heard but curious, you the you've remarks, I your like going a billion? about and if of looking maybe just gets some kind really $X the innovation product on everything of of or about excited taking pretty step product about couple I'd on encouraging, the for love prepared next longer-term And growth. thoughts Thanks, the revenue

Aaron Levie

Yes.

really about we're So road as we our excited you -- know, map.

map We as had the ambitious think, we've business. a company, still delivering, margin road I most operating while have strong in the leverage

of dealing the with down the would and call areas called critical out like and that amount intellectual have in reinforce protect. our an to Enterprises of that data of be form I property Mission-critical Some on that customer able content. the security other its projects are we want in whether to areas critical with, they to that or work they doubling pre-release in compliance. unbelievable content information data their and

protection, and and also a So going in security, capabilities. detection e-signature data all things, and like to lot you're down We're compliance see to be workflow of going nation areas data around. governance our doubling threat

be innovation we do processes, collaborative companies as their at around how content. more distributed, cloud a our go distributed move customers in, organizations business they around before, to to you're the are automate also as to workflows need need they than seeing a more which easier, to major of So more see get with means content. come then, even we their more digitize looking and believe and they and more offices, lot going And as they're more ever ways more you with tailwind secure, back their as to collaboration, work that

continue So dimensions. experience Canvas, just our those going to are on improve things core like Notes, web to

we're to have see I you're of, strategy product a multi-year a road we and announcements, bunch excited think, to year, exciting very deliver. next So that going and map

Brian Peterson

Aaron. Thanks,

Aaron Levie

you. Thank

Operator

from of comes question of the next Citi. Arlene Your [ph] line

Unidentified Analyst

okay? me Hi. Can hear you

Aaron Levie

Yes.

Dylan Smith

Yes.

Unidentified Analyst

billings wanted This the the I to behavior? a what that you talk change could is that about of little upside. about drove ask Steve. drove commentary George. some customer renewal for Maybe in bit I'm on just

Aaron Levie

Sure.

to catalyst into move being typical as given Suites, renewals. early we stronger QX, than volume saw especially of a able case, of is in always the So the

forward of move some been they conjunction quarter. largely those set which the QX, in contract in capabilities early that So contributed with their saw in into then in to pulled future in the customers QX to we often renew periods, that upsell, cases where billings the some and to strength renewed had in product and

Unidentified Analyst

one Got it. expansion. That makes the on sense. And then follow-up quick

I you expect you segments think bit a some in reductions some expecting Maybe those just see fill you're on pressure. some and if could where you budgetary to impacts. mentioned see little headcount to

Dylan Smith

Sure.

But and specific to wanted just segment se, who of are say different do basis. types be as that strong again, business rate, has that remained of wouldn't in that expansion more seat and lower platform by economic of customers, per X% to stickiness across full economics increased which of value a an the customers we down is cyclical we environment annualized those strong churn momentum I seeing go more overall, would impacted serve, indicative emphasize we seeing customers budget very on So been companies, the necessarily where headcount, that, out they're forward. specific or will had expect prudent reducing the We I our certain are at especially the those be and kind quite the types some of more as getting segments scrutiny. businesses, of of our the but

Unidentified Analyst

Got it. questions. the Thanks for taking

Operator

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

Josh Baer

the for I and tough ask to environment. question. the in And a wanted quarter Aaron Thanks a about that, congrats Great. on Dylan nice macro.

If you XXXX, look to COVID, real you and saw back headwinds growth. decelerating

very Obviously, macro you different, relatively the bit it's you little been and stable backdrops and I a differences Box. the could currency but RPO with are growth. XX% hoping net different retention rates, far, about So at talk billings was constant posted just

years Suites of wondering in and today how maturation Enterprise really the environment. couple and helped You're if versus helped really positioning this a ago Thanks. Plus or of has it's

Aaron Levie

two of just of and the you couple happy different company appreciate is powering obviously as the or bottom really capabilities was something advanced what been we today, I years positioning it. for XXXX, life No, the the and very both platform, line, foundation the ago, secure that call on the back just that but in of Obviously, is we and we're that But of content If we super and doing on line management into portfolio would deliver out and I we pipeline have. performance. a now collaboration which Yes. in top technology product three years and past extremely full increasingly proud kind have fed look about, were which cycle content. deals the the

Shield less kind e-signature kind was So year and on momentum old actually some in than a like of automation, Box areas getting of doubling there meant which that like into as an hit, strategy. was less security down pandemic when of the example, something story workflow

we've for governance. today, a security in advancements much advanced data more data platform customers, so, done our being the And Shield capability

spend business might the out and then in organization otherwise very look on. infrastructure of on deeper can a all obviously, We other those you have the like different ultimately, of proposition, when spend to go just so, up platform very, kind are and that go from we of the can customers secure processes that And keep there. capabilities value dynamic they customers. add our retire rampant our We very threats and to

kind and pricing product So think, packaging, conversely we've capabilities. customers that. just much to capabilities, the and kind more made those easier reflect of on And for our map, that's then road to then and much just attractive the on it continues I our leverage of

couple the when quarters XXXX, right similarly, we Suites. only the hit initial again, in of So pandemic very of had

Enterprise across now see And that we hadn't sales been into that's the that our and continue doing you motion. that baked of really deal large kind push. turbocharged those customer Plus to Suites of out rolling majority our the Suites really go-to-market of base. Obviously, kind and can we're so, has see already,

So the the pricing, management. our just really for content customers have around high-value after packaging companies positioning use going these the that and and map, product cases road

step I driven then in what very business, taking very a back in that us significant is leverage And we've the position. of different and think obviously overall the looking put operating a at just company. makeup the has

drive really I greater to execution. be think much that allowed focused, has us more

well. as also dividends And paying so that's

Dylan Smith

where how see to these and just some COVID, conversations that say as is change are companies impact as would And of I of show Outside and that well it. pronounced in up a certain maybe environment we seeing product, business. different. has Yeah. the build space, the very impacts. compare this on pretty real industries showed did some customer in step SMB In function in their a

are more a that In addition of very certainly cost focus type product of IT to for, you've to still what doing think driving to though less are environment. things customers immune our why of lot looking I in newer an capabilities, we're on aligned is with product in this to seen impact having not our much business, ownership, a which efficiencies and are especially just our total of lowering of stronger even -- customers continuing with spend a address

Josh Baer

Thank you. Great.

Operator

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

George Iwanyc

is This questions. George my for Iwanyc. Hi. taking Thanks

with much engagement maybe there versus Europe? deal So is you're a environment tighter us bit seeing you from the give what Aaron, related a maybe How on Can perspective? the Japan of seeing. scrutiny you're of FX and a update demand

Aaron Levie

Yeah.

geo's. on vendors or trends, seeing scrutiny, is kind There consistent there our trends mission they're in So across help of of can most customers more looking them to normalized that is face macro of investment. overlay -- pretty reduce costs all fairly areas really the where we're that their that critical I focus dynamic think and we for budget there's

of weeks And the so demand down I as our flows was relatively I well. customers cycles three well, certainly. some remains, about that into healthy, just in as there deal visiting in customers, visiting Europe think, environment ago, the Japan and summer, in

is one demand So say, in different would everybody overlay I that broad macro environment healthy with dealing a the still of environment ways. generally based with

scrutiny You're deals. in to that budget shows going up see

involved. might work was might that continuing that some a as the much numbers, tell be segments, we're we bit maybe with in mitigate there's But it. mean you the bigger, deal little Sometimes as through to as seats that could that thought smaller be fewer that can and possible

George Iwanyc

a and pressure And/or in out what of are you seeing products? rate deal standpoint, any pressure? the is share commentary with gains you're from then maybe you And right. competitive win seeing encouraging. building markets price All pretty the churn Are seeing some

Aaron Levie

Yeah.

strengthened. I think as we've noted, actually has pricing

price platform. being that and working value to like we're highlight our with way. one-to-one with I in really we're position really plus we're any competitive the conversation out customers of platform, more is because getting So Environment increasing the result per is adding the again, enterprise really value particular about I think, seeing, happy our the an pretty that's of of seat. a up when vendor of, competition full able value full platform the the of showing within

So the things still in of Canvas. super and launch exciting. advance of like that's And all we're even rollout

for. our So, I'm even more clamoring value adding are customers excited that differentiation for and

George Iwanyc

you. Thank

Aaron Levie

thanks. Yes,

Operator

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

Chad Bennett

Yes, hey guys. in. fitting Thanks for me

digging and obviously, kind the expectations, little of through been suite seems not headwind rate hearing to you scrutinized I'm renewals, did And So, reported not around to large or received think, seat like than of opposite. count that more the growth kind that beat into lower Enterprise just, we're expectations commentary by more kind I a deal FX seeing a we're in of understand These days thought. at kind kind pretty the deals it's billings all. and were trying which a what kind is blew or currency And base. growth. actually think, constant -- again, are of early I relative that than adoption. whether beat selective of I'm Plus that actually strong bit of bigger hearing well

deal everything there of is scrutiny, saying? the Or just realizing seeing? is of out are again, weeds, -- Thanks. too large what you're the not it kind people just and a thing kind but So, get that to in more post-quarter of

Aaron Levie

I deal trends we direct again, kind Yes. Thanks. the the is saw quarter of sizing throughout business. run from the we some some mean reports that of in interaction think the some customers, just, that with I that of of of trends

anticipate of certain it our and to in of being is and with prudent Some trends beyond trying expectations. continuation QX

dollars this save of in many kind value or very, right where people mean specific dynamic go now. their we're our out. some customers. help hiring play that. you We of very and for an customers security be kind might technology. that some time, could have environments, seen content many proposition you customer, delivering as that for and IT. a that it's sectors potent lot of it is hold, on proposal management When think, their that It's their not value on the expansion a same infrastructure of, ELA might a At the can seed maybe So, them cases, at systems, of the have look the we cost, in we're I there's a into spending mix millions tailwinds interesting that on of space with Again, environment positive in.

kind And out So, I being in that's I of of our all put prudent there. that interest out. we've also, the right of in, kind think when you that factor extrapolate sort think numbers now,

Chad Bennett

was maybe Okay. And follow-up slide of Day one a the then while ago, and terms when still lift think In I you goes put it per valid out price to think, least an Xx. seat in of real Analyst and from someone the whether Is around today? quick. retention you net in all the being, ARR it's that terms real core and I suites or at see

Aaron Levie

Yes. That's right. exactly

deal to size being of to trends, that and we're Plus XX% margins up into suites those So, proceed price the in of relative rates trend. price sales economic types retention now suite stronger further we with stronger from per seeing move gross when of really customers bottom impact comparing average are same do core seat to the net and particularly overall supported making see the we that Enterprise making to the that top has

Chad Bennett

quarter. on job Nice Thanks. hear. to Good the

Aaron Levie

you. Thank

Operator

Your of comes Instructions] line next Markets. RBC Capital [Operator question from Rishi the Jaluria of

Rishi Jaluria

the attach to I've pretty one you've two Dylan. maybe for my rates. Brazilian impressive and Aaron, continued macro. questions, little bit got Aaron, one much seen to Wonderful. spite nice drill right? want for down see Suites, in Thanks for I into a some of questions, so taking So

the outside you though Because trending rates, has for know you've think that attach past. the particularly talked As your I US in about in that been how Suite, about Japan? and

Aaron Levie

We on Yeah. to They kind that around That up of quarters Japan and did environment. in of maybe Plus call slower improvements because strategy. particular take a turned Enterprise all few seeing the Suites steady now our and out but has it front. channel in back we're were

in point. drive it single not across this impediment we the would So to And call to in as drive we're base. honestly, and the an continue in performance at it’s that out something now this continue just customer customer ePlus conversation it's every

Rishi Jaluria

your helpful. points. two down guiding That's did think about then bit us, it. ticking another there goes might because Or there other remind to Is are in you're on And be at it down got on that Yeah, factors some if there? purely about then, Dylan, any And Thanks. that play of is a that little and we NRR, that? tick headcount? impact FX

Dylan Smith

Sure.

it expansion. headcount X, primarily that Tier and So seat lower is

our As strong side our has expectations in terms rate there. quite what of as has been and impacts of churn equation pricing the mentioned, the expansion

So facing little primarily tougher point. the year, there's -- seen a your expansion in point that bit a seed past we headcount given comps the momentum really now but of we're to we've over factor that to or

Rishi Jaluria

All Wonderful. guys. right. Thanks

Aaron Levie

Awesome. Thanks Rishi.

Operator

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

Erik Suppiger

Thanks for taking the questions.

business currencies? just international to is have I business And local much it First sold then off, sold, I want sold your of how in your is guess, sure Is in predominantly make local a follow-up. I currencies.

Aaron Levie

Sure.

it's so -- XX% is international local it So roughly our currencies. of is business in the

Erik Suppiger

driver as additional penetration is installed increase once lifting with the Plus, going that customer what there deeper of your slow for guess that your start that that's, that And would base Okay. Enterprise you you penetration, opportunity Then what getting your it's a to the price on Plus? And is? -- penetration been is Plus? Enterprise growth? if across you Because is Enterprise

Dylan Smith

Sure.

broadly who we you customers now to Plus, greatest is types revenue, that stickiness value driven Plus, the they penetration of of of greatest more in lot total larger the XX% to So the Plus, less from strongest they are customer seat expansion of a Suites because this a Dylan. although is The I majority up quarter. once that still that's expect is pricing, price majority see contribution mentioned percent there seat then we move that, box, the Suite deals that and so per a significantly do time relative as year represents have Enterprise retention say into most recent is rolled XX-plus strongest this see on the options. Suites ePlus, saw by improvements and Enterprise can ago. timing, of now over the Enterprise out just terms net those out there's the but Plus, our are the significant Enterprise who rates the I but of take would not pretty from of XX% customers And already

as build the product our -- retention Plus pricing, could suites been time, but or what portfolio, seat growth. seeing Enterprise is to future So, terms net we've per would higher-tier certainly this from continue our upside, the beyond over customers change historically, primarily introduce of which by out in driven in strong we Enterprise we be price Plus seat

Erik Suppiger

good. Very Thank right. you. All

Cynthia Hiponia

Rich the Hilliker. next Your comes question line from

Rich Hilliker

steady come my Thanks where CS. large to and scrutiny Rich the and into guys. next for from? deals, on see year suite taking the strong the given attach. Hey should how quarter. and move Hilliker was RPO we congrats I It great greater question up it's was wondering, relative on from to

Dylan Smith

Sure.

are we of an seen term viewing in a internally, much environment have customers not on still Box So, as partner. strategic really increasingly long as durations impact this

continuing still to us. So, longer sign with deals term

so have contract point durations durations to some and view, from a And past pretty actually of lengthening growth which then those pretty slightly of generally in been RPO strength the payment stable have consistent have been contributed been as over and the year, has well.

goes that's terms duration contribution in metrics. she So, steady kind those of all of of as the

Rich Hilliker

one hear. to maybe, you Excellent. Aaron, here. And for Great

this your changing. in environment, product conversations wondering how Just are

Thanks. to sweet, or drive some of pressure? you're was Given scrutiny any the the I you through had if wondering just the efficiencies then maybe value macro approach, conversations selling and ways pushing overall relay other solution given given the around

Aaron Levie

Yes.

So, network a or SharePoint you conversations on-prem. side a document or file maybe from we efficiency on system migrate seeing that's the of for lot we can legacy share are management customers, help around

conversations in front the So, security the and the with data cost-cutting been kind more customers compliance. biggest frankly consistent expenditure that just helping our trends on on purely past those of has to side. years is of we're immediate really help of one Probably couple that

everybody landscape this is the no call. to probably think on I surprise threat

issues. ransomware have You

kind for movie really are centralized secure inside super platform able content is of contracts, information, can that protect that assets customers We and their financial have important their our protect happening, of a product it critical looking make a lot pre-release materials customers. and to being sure and activity in scripts, to keep different so and files of they cyber important are most these

that have of off very being legacy to they able single customers systems And so for limited we're applications, -- seeing getting across extreme that's in value integrate into, this environment. platform a visibility be their

Rich Hilliker

you. Thank Great.

Aaron Levie

thanks. Yes,

Operator

are floor for the will Hiponia closing questions. there time, Investor back from now no any Cynthia further over this turn to Relations I At remarks.

Cynthia Hiponia

Thank look we on us and QX you, forward updating you joining everyone, earnings to for this our Great. call. afternoon,

Operator

everyone, event. Thank today's you, does for participation. conclude your This

disconnect. may now You

Box (BOX) 30 Nov 222023 Q3 Earnings call transcript