Box (BOX) 1 Mar 232023 Q4 Earnings call transcript

Good afternoon. My name is Aby and I will be your conference operator today. At this time I would like to welcome everyone to the Box, Incorporated Fourth Quarter and Fiscal 2023 Earnings Conference Call. [Operator Instructions]

Thank you. of you President conference. begin Vice Hiponia, Investor may Relations your Cynthia

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

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

Following our questions. prepared will we remarks, your take

Investor webcast www.box.com/investors. at being is be call website will also available Relations for Today’s and replay on our

will be webcast Our audio only.

today’s post call available for Twitter download our the slides highlights @BoxIncIR. supplemental also of handle are now the However, on website. at from We’ll

net allocation and On including QX our and our this periods, future regarding head and XXXX, market long-term operating environment products, XXXX stock. and growth and impact our capital call, exchange including, we’ll of obligations, for ability potential fiscal planned results, achieve on and to margins operating benefits common remaining be opportunity, profitability, operating making models, margins, revenue, targets, deliver ability and regarding the repurchase our targets our offerings, enterprise investments, strategies, expectations retention to our rates, and our billings financial including and forward-looking from, address challenges our and of, market the macro currency foreign the operating statements size savings of cost customers, pricing timing revenue free model our count adoption the partnerships, our strategies, our and our business and margins, product rates, for XXXX new other of and fiscal financial cash performance full the our future flow, impact expectations performance leverage, our and year fiscal guidance, operating gross of future

quarterly our including events made in to Securities press factors release and Commission, today to best our the reflect Exchange recent file earnings that to statements and on differ and on may These filed with March cease documents be Form this obligation as Please change materially. statements them on and report any actual they up-to-date. forward-looking cause results judgment our XX-Q for we These refer disclaim today, from actual uncertainties made we risks most or results update risk the and currently revise call. or factors should to or of information earnings on XXXX, known X, being based us may statements differ materially to are

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

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

me With Aaron. hand to that, it over let

a Thanks, on call increased a a We and had revenue basis strong Cynthia delivering year quarterly run-rate and revenue a of exceeding you all thank profitability. Box billion today. annual for $X healthy and joining growth at balance the

revenue annual growth. achieved full the For XX% year we

operating more drove as expansion up basis operational non-GAAP year than excellence Our achieved significant XX% XX% from margin we points XXX ago. a margins

growth. term strategies investing testament to for on to environment the is even outcome results point free delivered our allowed our we challenging of slowing ago in XX%, delivering execution of a cash deliver place profitability our these while and macroenvironment and amidst continued with on growth from several revenue margin ability the improvement us years last basis XXX revenue to focus durable a a structure in put our still We on a bottom-line Our long sharp XX%. of plus target cost to performance flow demand lower execute year's

delivering while achieved we QX year margins, gross quarterly record year of over and to Turning operating revenue margins EPS. growth XX%

our and priorities 'XX. our impacted year anticipated dynamics their pushing on and headcount budget getting softening deals by expected from pressure decisions included across we added out internal retention scrutinity rate customers customer's growth dynamic with exited billings to some deals QX IT also incrementally smaller lower leading this or these over some as As greater and impacted business cases and year down this transformation a than was Even FY net initiatives. In macropressure.

secure their of IT systems up or Our customers data, extremely and drive they simply look mind top platform for and their stack. productivity retire most remains as legacy relevant important to IT

global deal to to a and logistics additional the and multiple our see Box's productivity QX expects With security e-sign company governance to salesforce leverage eliminating employee customers Examples through in to value a e-signature of company upgraded plus and shield the the delivering that include, while integrations. enterprise Box this significant year six improving for and solutions. cost capabilities by savings need sign unlimited

QX well reduce also share be research as their next opens year. their will environment new The increasing legacy with other news posture and purchase while This medical in plus up Box. facility additional Box systems for a as the retiring when file complexity center security research sets to cost enterprise expansion

of imperatives work optimize As focused and more productivity to a in are ensure across as data especially security ranging I environment. business CIOs continue hybrid their simplify in stack the compliance dealing They and a working to digital with ransomware from number they wide on threats range a most and are leak move they speak industries to transformation cloud their and challenges of data their challenges. remain IT and their with CEOs to importantly spend enabling

the content. or ability to many work due tools complex our led content know overhead. risks, is security their solve to that Fragmented is greater At best to positioned with and to significant help enterprise lower cloud IT We have challenges architectures and anything these with challenge. limited productivity legacy how too of solutions management content automate customer center these overlapping

stack their the to of from to beta innovation with as data range important in we're to QX solve enhancements to a platform customers for our and continue launched new the Canvas, drive deeply public up Shield AppExchange. drive our to started. landscape Salesforce just IT virtual new the key our to enables in protection Box on and across Box version spend their We getting unauthorized simplify productivity wide and customers and with [ph], their we such solution customers of we access. against of with Box authentication greater integrate most And to this Integration controls more account vast verification enhancements continue protect the Salesforce delivery challenges whiteboarding even adding organization, platform optimize releasing these threats Our and

FY dramatically deeper going To X data, our forward pillars our into security I we customers' 'XX, will be major help As our be will we core enhancing important look protect most on differentiation. of and admin complex to out building requirements features life all cycle our features support standards. for to landscape, further high to shield governance capabilities and evolving compliance more support maintain customers, an expanding continuing threat

disseminate internal admins, be of and to on in with with modern your and To we drive out advanced our experiences external what's more and workflows, continuing for notes core richer users product offer sign our enhancing to and happening to adoption visibility audiences content and down our and capabilities will content to external our collaboration up help into the to expanding workplace building awareness improve content customers customers all easily, seamless and hybrid internal collaboration doubling and relay on more. insights experiences for products workflows, productivity, usability, help canvas, focusing

single our of building With IT to our for and the integrations and all our enhance like source systems on making Microsoft, Box continue to ServiceNow, customers' partner truth further build connecting tools out critical many applications Box. focus to customers the we in Cisco, content enterprise, continue on IBM, Salesforce, also platform, while will Google, the content across for Zoom others, we'll

partners know content. the store, We security building content sign, contracts, resides of scripts, will enterprises It's information. insights our built helps annualize and and campaigns, gain marketing more. further Palo company plans like the movie customers' their enhanced project automate, most most we range Networks their our across from Alto and partnerships also research digitize, important Splunk. their out data reports, secure, their IBM, in critical defining collaborate, With important We driving their that Okta, be Cloud, have that wide ecosystem security our

The our all customers' generate framework Skills, recent Box. language a enable we universe best-of-breed from that cases Box models customers. value cases more applies and content use breakthroughs in see of to on for technologies it can large AI to also that Box, their from when new our we use is enterprises new Building in providers AI content solve for leading in

a from and to to an extract find example, synthesized a insights or the invoice As much a contract, a clauses box particular more. quickly any risky for an pretraining key report answer metadata the key for prospects without research sales of question summarization, being able from query document,

with content us but will take vision This combined opportunities product AI of we will the time, bring exciting the expect future. in new digitization

turning to Now go-to-market.

to continue enable the of XX% offering, increased suite multiproduct We from our offerings sales to Plus, of Box a existing in ago. representing across of geographies. our large in value full saw now QX. year XX% new was continued customers suites of our in adoption more We latest recognize over $XXX,XXX, deals and deals platform solid with suite rates deals attach all XX% up the over Enterprise large with suites

go an to Plus and also contract include leading some deal their that in-region of a and and workflows with customer wins With health be with partners Our plus requirements, Box, through Box Teams, X-figure company, meet plus compliance OXXX to GXP Box QX customer to tools well. accelerate of management their Microsoft Shield complex cases. to became sales to A R&D like able validation EU use compliance enabling their across safeguard upsell, and and new X-figure will requirements. expansion fulfilling compliance integrate approval enterprise storage a them Enterprise they with regulatory multinational global wall-to-wall most business to RingCentral including Zones operations, current while and that execute mission-critical rollout Box's use with leverage collaboration manufacturer care a as enterprise chose

in and to the customer Enterprise is energized fully of the held our global continuing continue value base plan We ahead most tackle focus focus the of us. ensuring to more to Plus. to Box out kickoff, customers over we moving Throughout recently go go-to-market XXX,XXX FY opportunity and on get our team of 'XX, on the

programs partners, motion with public sales Our health down deeper working focus and sciences, like all life to are technology retain key in going sector doubling and geographies more. care, inside about through on land, key well services, adopt, integrators strategic engine financial international our more our as system industries go-to-market as digital key applying across efforts, field expand, our and

executing we been growth delivering drive the past on operating year, improvements. strategy have also over sustainable to while our continued Finally, margin long-term

from impact on to macro at the gross dynamics, times, deliver macro, challenging and the see remain we results ongoing significant focused the pressure the line Even continuing top As we margin to continued we which to began deliver operating line may bottom improvements. to environment expansion. and adapted amidst

investment the to continuing are initiatives, go-to-market excellence We public across everything ROI-based efficiency the improve our moving and by every business, in decisions we from fully driving do. driving into product to across cloud margin operational area making of gross

of market There we Our never the which will enter a center to throughout resilient the for do of is incredible Box financial model and how as ensure what into we that important technology. customers with even exciting now time business allows of content period the us strategy our simply world and at business work. a is very more has in more been can to change dynamically respond environment,

I'll With it Dylan. hand over to that,

afternoon, us. Good and thank joining for Aaron. everyone, Thanks, you

optimize through Box out was growth laid for financial year currency constant a FY Aaron allocation operating As a capital we of well-executed stated, key We objectives at as strong on returns basis, the significantly annual 'XX and margin revenue X year. expanded we the the delivered accelerated strategy. beginning on a shareholder

FY Additionally, delivered margin we of the 'XX. flow we proud very expansion strong are cash in

currency than in achieving deliver in million generated or profitability, our point XX% full In We our we free and year us. despite significant of 'XX FY greater non-GAAP macroeconomic GAAP initial full currency we FY experiencing guidance operating anticipated. $XXX line and operating a expanded percentage increase to expectations. our margin, initial marked 'XX, XX% delivered also of XX% year-over-year margin up a a $XXX our headwinds constant by basis annual year with million of first ahead points cash revenue initially in for XX% We flow, year-over-year. milestone XXX significantly

challenging target amidst our of the XX% margin resiliency achieved we free macroeconomic in growth cash model financial revenue delivering Finally, 'XX, FY of our demonstrating of plus environment. the flow

XX% year-over-year billion, remaining currency faster increased of increase Turning $X.X or on and a a $XXX XX% constant ended of obligations year-over-year to growth XX% or We with in Revenue than again once QX QX. or growing million XX% RPO basis constant revenue. currency. performance

roughly over recognize RPO of months. our We XX expect to XX% the next

QX were total billings of continued we X% experienced in or customers partially scrutiny representing in constant the prior by grew currency. larger impacted had million QX a increase. the paying QX, $XXX,XXX of year-over-year $XXX annually, X,XXX deals. X% In and than quarter approximately renewals XX% early year-over-year more we billings

suite complexity their from ago to full points adopting support year Our deals XX% was a to customers rates And we period. use cost XX% the Suite for that attach and and from our suites a rate QX, of high-value in now cases revenue, in organizations. XX% globally. roughly ago $XXX,XXX represent XX% up attach over saw in increasingly XX consistent are year demonstrating customers reduce

rate the expectations line XXX%, set our the Our call. net QX of with on retention in end we QX at was

churn Our improvement was demonstrating In to 'XX, product with rate X% we full in prior annualized churn from full remain at demonstrated an lowering our FY X%, year, continued We revenue the expect stickiness strategy continued driven the headcount roughly expansion as the efficiencies anticipate due reducing on XXX% year-over-year, and XX.X% of climate per IT by higher by gross where certain in XXX suites was macroeconomic we pressure XXX roughly due our significant points rates profit to strong seed X% our basis million to expanded exceeding to leverage be customers retention rate infrastructure and net seat points continued are and our adoption. by and to from basis our of model. margin up gross continued QX impact a the price $XXX year-over-year budgets. XX% business growth customers.

our QX the and 'XX, we As completing in FY I and QX. public the center cloud expenses fully in data discussed last see cloud transition earnings on to during redundant and our running are call, public we'll peaked

be approximately QX and expect before QX this margin We of improving back year. to gross the in XX% in half

be us in full year, efficient year. margin to the with roughly structure For XX%, expand gross we cost to underlying margin more the gross expect an following even positioning

on our and with FY headcount growing In we higher-performing sales geographies sales we 'XX, a our continued our 'XX, year-over-year. force by force grow percentage achieved FY target, In intend quota-carrying sales in force XX% to range roughly mid-single-digit focus our the segments.

to in a commitment increase QX our drive operating on delivering with continue income. We profitable growth XX%

year. operating was basis an XX.X% XXX the up delivered margin in points from record we Our exceptional XX.X% QX of last

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

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

approximately year, $XXX the million. million we For repurchased shares full XX.X for

since a outstanding As total QX. reduced diluted result, our than shares more by we have last X%

'XX, compensation headwinds of to basis exchange Our XXX reduce as despite in approach points fiscal rates. from by location revenue year-over-year a foreign and significant strategy us off, disciplined equity paying enabling percentage are management stock-based roughly

key our opportunistically cash committed be equity in and drive balance to prudent to generation to leveraging returning remain shareholders to We We free capital practices. compensation growth. in our our will sustainable initiatives to flow strong and continue sheet increasing growth long-term invest

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

for fiscal like to would With guidance that, to QX I our turn XXXX. and

significant the to in recently. see FX even continue volatility environment We more

'XX. Due we we business when international basis. versus to spot to headwind year current dollar we the timing experience on a other in past as-reported over the the to year. roughly full of expect headwind the currencies strengthened which expect remain in point a for the the Japan, smaller the XXX At basis basis FY 'XX point with expect an revenue year, for our rates, FX do exposure, of QX us growth Given particularly we XXX of headwind impact in becoming in FY to course throughout a

guidance environment in expectations FY our FY factored With current for this of 'XX our quarter into have we challenges persist 'XX our respect are current and fiscal to throughout first macroeconomic the the expectations, to XXXX. for

days $XXX approximately there QX reminder, the operating X quarter basis of basis expected revenue of headwind our fourth versus anticipate $XXX a year-over-year XXX an revenue FX estimate a and to are to includes rate. As FY of QX, representing to we million, sequential million This to XXX creates growth 'XX. points versus growth. revenue $X in X% fewer which QX points approximately We margin impact million of

We an of percentage as-reported growth points. to our mid-single-digit FX in range expect an QX approximately the billings XXX basis, be impact including basis expected rate on

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

to margin temporarily be our We expect and data XXX year-over-year basis point representing our FX from approximately expenses. approximately despite non-GAAP improvement XX%, a duplicative operating headwind an center

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

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

to XXXX. $X.XX our a anticipate includes roughly EPS range of guidance Our full in representing to the X% of ended year-over-year real year related on range a the growth the at currency billion in due a also or XX% FY revenue headwind be onetime basis. $X.XX this end 'XX high QX $X.XX XX, billion, fiscal consolidation write-off estate to to January constant for We

improvement of We results basis XXX XX%, representing operating from a FY margin year's non-GAAP point last of 'XX XX.X%. expect approximately

our non-GAAP $X.XX be $X.XX, to EPS $X.XX prior We range to FY to of the expect in up from 'XX in the year.

in $X.XX. million be $XXX $XXX approximately the expected to respectively. diluted are is shares EPS and and to GAAP to range average be expected $X.XX of basic Our million, Weighted

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

billings rate is an be Our in as-reported basis. FY 'XX to roughly with growth anticipated growth revenue line on

of We impact expect growth rates. negative XXX on FX FY basis have current to our points 'XX spot on billings roughly a based

FY 'XX rate 'XX to increasing combined rates. our spot FY expect cash XX% free current margin be we Finally, approximately on our revenue with today's based flow growth

basis and XXX headwind to As reminder, from billings FX point includes combined previously. we this a discussed the revenue

and forward ago we we durable that it multiyear our a while demand environment to growth. to slowing important a investing 'XX while expanding FY the strategy As look is began profitability ability lower through of years result cost note to beyond, is long-term navigate structure to for our

for 'XX. benefits cash FY these the and free 'XX our FY once again calls results of and our operating saw We outlook in expansion flow in margin initiatives

a plus forward in expect expansion details expect we flow to margin expectations. a platform York focus improvements revenue cloud The providing Financial economic growth greater toward March financial growth boxes revenue healthy further versus and profitability to of by drive our a FY XX% with our to to environment, to 'XX, and the free cash New our come. model Tuesday, content look XX% be we weighting in discipline growth While execution on of the pressured our margin strategy to revenue We on Annual XX. prior continue deliver of and years long-term in continued of balance City our will Analyst Day at our the

take questions. be I and Operator? your to Aaron that, With will happy

Instructions]. [Operator

of comes line from Enders the Steve Your from first question Citi.

currently, guess bit guess and both just you're for seems a how I expecting that 'XX. details want or is assumptions within can you're impact the then seeing you're much I here versus and start the kind I more mean, And are and much things on get pretty maybe changed deal thinking little on to of duration have ask worse little I 'XX expecting as how you outlook bit to of get from size what it expected? a and before? kind we a about

This Yes. is Aaron.

Dylan part. maybe the second on just can first think way that think outlook, with we the comment I'll in then I on general hop and the

So the just we appropriately the we in given see market. be want trends to prudent that

'XX and our think rule-out on 'XX with a initial though in a around basis. commentary improvement of FY reflected profitability, more that's rebalancing on meaningful I FY still to bit the outlook our . little kind the

delta much think I see prudent of dynamics in see that set the of do So what line standpoint are bottom I of as again, without of particularly the a sort we in top line macro, trying a we expect that getting improvements. to expectations and think is, we much the up form too to from then what obviously in make drive around

for sort putting continuation this right it's we of level and year, into the of just plan. a again, saw of the conservatism somewhat what of QX in So

about continued of these durations Yes. where seen some a to kind we asked address in customer deals, seeing lengthening you we're And contract of duration. have then what in

making continuing lot strong That's of more with the make of the a RPO X of drivers XX% are in well. growth and commitments saw very growth as customers to and backlog fueling long-term Box. the big of the So strength regularly we that

remained on the to we about we up overall average very have year-on-year is talking customer X% price seat on have mentioned sizes a have environment per initial last pressure go what remained and on to this elect deal, but strong might overall to call, as our economics deal is cycles smaller seen, Deal relatively leading values, And contract the for basis. about the they as customers certain actually stable.

Okay.

seeing again details any of that how guess that the I can you're perform guess, the we moving you And further investments I and sales helpful about out you're the you the called productivity very sales as from versus That's deal kind there. think thinking environment I how provide maybe on there? forward, context reps, expectations? rates on Okay. execution side of kind given think kind they of about mid-single-digit

the on the I'll biggest wants tech, to Yes, Dylan life color really productivity of interesting public build across look But commentary from if and come some again sector. across piece. it's the cover the from Sure. do if wide they of industries, deals range a some quarter of environment because you the then period, an sciences, health care,

I industry, whatever be sort X.Xx. a segment. may which might cases, So company headcount maybe not situation quickly. have as there's where budget sort think or some just been of in you overlay a now participation this growing have that a percentage x would there's across their -- And is is And broad-based across of the means deal of of pressure,

that And so customer. total upsell get would obviously, from that's from going to normal put seat pressure a on that the expected we count

moderately And level saw think overall, think year. across have flowing we environment X maybe this an we prior had the muted just some where whatnot. would at that we're or into prudence the plan I the through then So I of from performance but business, months expectations

Yes.

of FY the the months X ramp the side, capacity become months macroeconomic X% shows hiring we the in sales that we And for provide X expect, XX better sales direct these SMB wins in our so times mid-single-digit while the productivity. that year, reminder, about up that because year range our of to more through to FY dynamics as a And to fully expecting aren't reps, sped in of XX%, course do impact see as ramped enterprise kind get versus to the this be following a have really about you'd will the for and metered environment 'XX, typically force 'XX. on force

thinking longer-term some really about that that challenges growth durable . the year. So we're seeing of despite building this

comes next from question of the from George Your Iwanyc Oppenheimer. line

with Maybe in engagement what the Europe support? overall channel you're seeing give on us and on some you can environment, deal perspective respect to Japan building in Aaron,

Yes.

of Japan us, in taking a kind deals lot very for So rate, we've healthy suite still on Japan. instance, channel of kind Overall, for environment first, participation a gotten support. better our great

lot about we're was the we're still I but over happy So last the customer with of that interactions, momentum kind very as in call, as but this Japan a upsell happy bunch base there. as customer number from of lot And up earnings just new just in come potential in that. time, we of I well. that QX, a the logos called out a That of on more well mix great could see

macro that happy of with the environment considered macro within But And your very less all things I'm working in of range some again, slight still Japan these Again, the with picking dynamics. performance. up element across So a mix. specifically. a being just of on industries EMEA, and added there, approach the overall, of with, driving channel-centric question segments EMEA that execution

characterize I it. So kind how that's of

relatively rate, the fourth year, fourth a back from at XXX% are pulling coming for bit level? the are expansion quarter, that expect looking do how accounting Or you had you that net expectations for expansion? stable Maybe the the you your quarter in you

Yes.

we coming to the for net expect roughly rates be retention So that year, XXX%.

very the But impacts by to And so and pressure, to downward we full strong have environment, put driven we going the rate retention do had some expect that out forward. do expect we economic stable which what really net X% churn earlier, a called seed is that rate. expansion that

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

billings the gap help next you bridge the that XX% the could for this growth just year currency constant Something growth and XX% from between constant year? revenue currency

Sure.

can basis. factors quarterly of a create between delta handful a are there the on that So a X

those volumes past disported renewal like large prepay through saw But out billings the is the year adjusting as outcomes stronger in called like of multiyear prior a flow can in, that half things part kind to that that. into also we and there this of factors it for on of especially things had in thinking don't kind year, kicking side early unusual revenue. fueled billings the QX was that first billings, the well, So -- just of saw fuel dynamics we some amount economic environment of then a

ending fairly the in be are revenue while growth tends correlated, deferred growth. was So to look year's year the XX%, at more the aligned X if to closely closely following revenue and you constant that currency

role then revenue 'XX, down wanted bit That's macro step straightforward, a guess, I in helpful. ask growth those I maybe the And the little in I targets, some more guide, the FY mean, given to to regard Okay. of and of FX.

that's more about FY thinking 'XX? what that of into FY Just sort context positive down, add really rule be sort there's FY of just prospects 'XX embedded for that's off for wondering if through Or could FY of lower a stepping saying incorporating 'XX? in of And more macro 'XX? change might in just FY some 'XX you that changes you if beyond are wondering other growth macro

Yes.

build. is on better. think, So and we're other kind into guessing I'll and everybody, navigating where But other kick get of great this. of let -- to question, think, Dylan then It's teams maybe you're going dangerous off the as and talking sort position change macro environment, when for always a I I we're is as to this a

million. assumptions of range of this be in really billings what so putting in says on on sort A that where of be look throughout front as flows to And like that obviously not we position we're . largely a many too outcomes. framework see the 'XX, FY and will there's RPO front a baking we're in what to terms that that $XX into obviously year rate a trying growth out lot of revenue seen opposed

flow on as industry that side. somewhat outcome the be operating we then the of result will rate and And margin kind the cash that, margin revenue functional to of to a think

wanted we that, to so on out And was the XX to XX-plus that in going just range, be call front. a greater that really weighting of profitability XX, with kind

out And have just from models prior there. that been out some so calling that

that's a to that's lay a us rule meaningful we kind the so mark. pretty still expectation of basis. to out. But be above And that on we're think trying going XX getting the current of obviously uplift

challenging bookings terms the drive to and how really mentioned, are in that's the works FY revenue of on performance see going 'XX. for it build of macroeconomic to and to expecting together we just all environment as that And 'XX, the coming pretty a bit a is, this Yes. in FY duration we it's that throughout year had

kind we're thinking to that's are our how the expecting 'XX it FY said, prior But had of pressure the reiterate years a to ahead what our just to year revenue the we ago. expectations. weeks profitability to fits greater Analyst So that of and expectations lot expecting more our deliver Day. we'll And as together couple details about how a of than Aaron we at a been in are had into dynamics get . what in persist versus

Your Suisse. next question from of Hilliker comes from Credit the line Rick

through the on make again the to to thought same progress hit just wondering through you be was some we looks gross rate gave just where last go I it of the coming can quarter, us if sure the on the think but Dylan, and might comments you trajectory year we're maybe think about exit like? year? those margin as I as I page we helpful

Sure.

impacts So kind then XXs half our as the the do the the that for be as high be kind gross combination by year, XX% we're first year we margins next gross half the in -- margins of of of the deliver so about then of expenses following XXs and higher into the FX in range, the expecting upper driven exiting center lower to to XXs to well full but in we kind of expect move year, data in in as year. XX% high duplicative a back peak

really the that you'll heading migration. center the where data impact is into all 'XX really see of FY trajectory about So

the last coming X really can out, helpful. how give it how then for That's bookings we Awesome. And my start maybe year? sense your can would but or Analyst shake wondering of Day, talk was on at basically And the be any about comments us also side. helpful? trended, you multiyear really I that's where looking if that's to

deals. either very incentivize for Box, to duration with So high the our don't norm, years. from volume that prepaid especially X So multiyear tend all but We standpoint, sales multiyear terms multi-year up commitments signing don't enterprise they're for annually. in it's billed a typically sign customers we of customers to a see at prepayments increasingly force or contract

those out X expect very don't we So called time we're see as to coming end. QX, see don't the a do to change such in the years. in We do often. on their we from them we time, elected that that customer large for But to that dynamics

it to we signing is standard seeing prepaid agreements would what the being the customers trend annually of that expect. are So multiyear say continue I

factor coming So the multiyear of prepayments in a to don't expect much year. be

comes Your from of line JPMorgan. Herman the next from question Noah

to go-to-market color sense other into you then better on of just of any initiatives the incremental get a this you just a key kickoff global Just heading And follow-up. provide year? could briefly mentioned go-to-market some quick the

Yes. Sure.

kind broader well trends kind our think about population definitely overall And But customers super bit expose and the we'll it's conversation of set we're biggest strategy attend. with kickoff Analyst really whole of the We global I as Day. that market in organization go-to-market right the on So our now. was our and more a tuned as little the had at seeing yes, to boxer good aligning go-to-market of strong. all

organization. to front to transformation talk I CIOs very of CEOs and see the that we and when kind digital and in center team these still tend are so broader initiatives does, very, still every And much

do productivity, their and automation degree they at AI, environment. Every really focused on they CIO greater drive seeing kind for in kind looking IT of work leverage more get in how how do hybrid of really, of with a CEO spend. customers and particular, this is or we're

have sure And IT how so their they how they do they stack, more do platforms. integrated make simplify

remains and finally, of very data customers. then And our for just security center all front

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

Jaluria. This for is Richard on Poland Rishi

Just the that of you slower retention it kind side? kind bridge and points, suite of given of kind expecting upsell the you us are rates around the from? of a to cross-sell coming in of expectation can -- down Is bake coming more motion? you at where help overall contraction couple is Or on kind some do some mostly

So it really is side. primarily on the seat

of of and kind of So stable as mentioned, the strong had a up Plus adoption as noted, point points was we XX strong the and retention cross-sell from particular, as we've Enterprise both as an very view, in year-over-year. a seen, Suites that expansion seats few receipts well of very

So the a momentum really impact on and that's well. having pleased there, the nice as pricing

we net from kind when that retention rate, coming volumes. about a reduction the think of So primarily really seat is

similar it break of very signaling there are That's that of that you we then between kind it. Are trends differences demand kind the across the to the business? if business. Or just anything call would out Got helpful. the of And enterprise apart pretty kind between X? of the and the is were side

It's been pretty Yes. consistent. actually

So as the as industries. of segments both across business different the well

that the kind For of outsized the particular we've the kind any but seeing macro, out we softening are no business seen parts most general just related call of to of that pressure.

from of Your comes from the Raymond John next Messina line question James.

you're headcount be just consolidation, to John seeing I'm I is prime if love I'd beneficiary areas position expanded your curious about of I'd hand, you on puts into could some platform reductions. for Sign and Canvas, we be imagine the to and a FY a there? just talk with because into so in get This you Brian. on 'XX But color as like takes X understand head into the vendor

Yes.

slower think from an X is, have seen across a it, which think used and great race result increasingly that's a I of we and Dole our we're time, a sign of that's same we've of letting drive At this more growth customers to Shield. way some seat cases workflow expansion things more seat And us customers think kind become and kind things that if that hand, some and just Canvas creates growth, prices expand kind and like pressure noted of our industries on up kind And value and a proposition. articulated, in I for Plus. we've headcount broader as you normal of have various Enterprise the standpoint. strategic as about faster to Dylan like into

some replace overall, architecture, way of go in and you other segments. extremely a interesting seat normal So think with a consolidation see approach broad our have added we of box is you technologies bundle set in a it's message market more customer of streamlined the simplifying still industries, the X IT these because such maybe or kind compelling. on to growth that definitely a would much of products But I add-on can able in of very X being healthy an broad sort just very, momentum where of some segments. set pressure see in But

that having kind system or past I e-signature get with an seen that of light in definitely I'd of into only be That's that the increased Box. in couple been the tool environment. conversations can I've population, by the we've fold customers part macro X maybe and used quarters been of this document conversation And love management to a an storage of legacy rid of number this infrastructure hey, or of start now that with, all of conversation

focused linearity And any That was I'm also mentioned focused deal on And it to if last helpful scrutiny Great. scrutiny. Okay. deals? also particular color quarter? talk similar about on larger really you guys was the curious can I'm there. you more in think was quarter I curious, then region?

Yes.

back macro of linearity over pressure I'd that to the we typically year describe we was what kind would fairly see, half of similar building So say incrementally. the the the

significant then So fourth weren't particular And now linearity especially the no of terms in there quarter areas scrutiny that of in really that's overall of quarter. a trend kind kind of -- that macro terms was as any we but see general impacts, the typically heightened in same differences, which saw scrutiny.

I of IT across kind environment more spending a think the it's . board. just cautious

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

This is Nick on Bennett. for Chad

your more So Analyst targeting year, at of XX% about in revenue coming you the Day from than talked last suites 'XX. FY

penetration, off can here in past the years? why year. with next that up XX% there penetration reason of right, the Suites go that near thoughts penetration where couple should as changed Is have over your XX% Or to a level rate already So we the level?

Yes.

pleased with we area very that's So been momentum. have the an that

ahead So certainly, year adoption kind of what a at the is ago. had Suites moment expected we we are of where

certainly, certainly from ago, milestone would into standpoint, a of term we plus kind timing thought get we'll as reach and So expect sooner longer year that details we to then where than from to ever a the revenue coming of steady provide XX% more . as majority suites see And in Suites customers. Day. Analyst as optimistic we our at headed, of be is our thinking significant going terms that the state we

call back Hiponia, Cynthia I Ms. over This to concludes question-and-answer you. . session. our turn the

seeing and us look Day call. to Have that New at Thank you at everyone on updating for forward a day. Great. of Thank our time. we operator. joining look you, We XX, forward good March on to many York everyone, the you, Analyst

today's conference call. concludes This

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