Box (BOX) 29 Aug 232024 Q2 Earnings call transcript

Good afternoon. My name is Emma, and I will be your conference operator today. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. [Operator Instructions]

you. Thank turn to now Box call the will the over team. I

Relations. Second and Cynthia Year Investor welcome afternoon, Quarter Hiponia, to President, I'm Good Call. Box's Fiscal Conference 'XX Vice Earnings

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

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

be audio. will webcast Our

the our supplemental of slides at available now on We'll X today's highlights However, post the for download call website. Box also from Inc. are platform handle IR.

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

the based and factors uncertainties documents today differ Form press judgment Securities may the we recent made currently materially actual to risk actual or our and earnings events Please report cause our the to factors and materially. risks and statements earnings release call. results and These Commission, Exchange statements including differ filed may most known quarterly us, on that from to best this on refer on on reflect our file with information for XX-Q results

These of to being disclaim date. or any and made to today or are forward-looking XX, be change revise XXXX, up cease statements to August should as obligation they we them update

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

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

the me let to over call that, With Aaron. hand

you, Thank revenue and year-over-year QX, for X% Cynthia, today. currency. everyone, or delivered we growth in thanks, constant joining X% In us of

reflecting and margins were operational challenging macro a basis up from environment. continued XX% our ago, operating year a Our discipline points XXX

across customers nearly sized industry. last the every I with geography few spoken months, business, Over have and

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multiyear better initiative. be margins. to centers impact proud the will cloud. note fully has of gain scalability in comments. Dylan our to execution performance and his effort our This critical gross a a from like been to infrastructure the in to in I'd more margins I'm that to complexity production data milestone will incredibly our we this given fully QX this our major move environment discuss our But gross migration, of on the the running cloud critical Finally,

go-to-market. to turning Now

delivered customer programs and healthy Our growth well key as results new quarter, logo force continued sales the in go-to-market including expansions. as

Cloud full also of to our brings Box customers. multiproduct the suite see Enterprise value offering adoption Plus, continued the to the successful Content that our We of

of speaking I XX% sales in largest this attach in XX% month, In deals achieved in we $XXX,XXX. QX, upside QX, in of suite market. was with Japan. customers those record Enterprise our conversations in over and suites we the large over continued Suite Japan this over comprised in Notably, large reinforce well deals Plus time and Earlier spent deals have rates

We excited to the have us. opportunity available been about never more

content tech a expansions support with in hospital stack, customer collaboration Plus investors the Box to to customer also the additional since their to States including expanded and access integrate school with to of XXX and the Plus purchase Enterprise of for growth and and ServiceNow expansion of its Box signed entire external QX medicine. the organization. Microsoft largest include institutional been United and who enable of use has one plan needed sharing leading Box Our wins secure parties hospitals They Enterprise get one upsell of with the existing Plus Japan's who an to Enterprise resources XXXX, the of and

programs, that the help go-to-market into stored product efforts. they sensitive consolidation content, leveraging to on to our integrate research tier marketing progression of business. healthy Microsoft system expand much Overall, pipeline applications They'll and plans have sales full year, expanding markets our includes our customers the have public a building protect focused breadth digital shield efforts down services more. which sciences, our and of partners, content drive them and Box plan engine, in we're the leverage today, Box enabling their marketing we to distribution and in life and motion and across vertical We sector be this on field focused financial into they the remain higher programs to the with the platform. And leveraging doubled and to land key like integrators

best-in-class to management, rate at business secure briefly workflow use in as to I'd it clear Dylan, delivers that macro the Despite content full this, like seeing. Content we're prioritizing X% lower cases Before our Box over churn the growth turn collaboration. has to It's most areas enterprises in remains value the Cloud and where climate are delivering on resulted anticipated. I environment current comment seat than the

and gross cloud power had relentlessly going to market set the and conditions And a for revenue growth year-over-year product road in we've FY in well the content leading ever expansion healthy focused accelerating I'm in customer margin customers stage operational a confident cycle the with the life remain massive. content base allowing that the improve. we excellence, XXX,XXX after of deliver a than margin to with that $XX opportunity team full we of front portfolio strongest world-class of future We're 'XX. more operating on economic go-to-market enterprise. is and The over us us as map billion platform

data company's from ever help and to important insight released and to In ability report, is found Box data. over this they by need we XX% positioned intelligence unstructured in is AI, will in bring uniquely manage, we XX% than and secure, is of automate, that exabytes and joint IDC. collaborate recently customers' these challenges information, IDC a to And that with transform solve growing number XXXX. is productivity information the transform with XX,XXX gain to to The how work. before, enterprises more their Box and our

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

while allowed EPS In Aaron. Good Revenue and and profitable line challenging business despite Thanks, above our we for continuing cost guidance our invest structure. operating landed you delivered growth our model guidance, in balanced everyone, margin with environment. joining and optimize a in to afternoon, us underlying thank us. macroeconomic to QX, our

our also We capital portfolio, are to continued our product of significant have return and innovation across prudent generated shareholders. pleased delivered operating to our leverage

In growth now We on million, X% revenue more an of a up year-over-year. have nearly $XXX QX, X,XXX X% annually, we year-over-year increase currency paying representing generated total customers and basis. $XXX,XXX XX% year-over-year than of constant us

years attach our year in platform XX% our revenue, customers for large rate from ago. QX a up large in the period introducing improvement value from after is suites the our Content ago of and year demonstrates XX% now to delivering suites revenue X XX% deals, notable XX% Suites customers. that ago Our a of account Cloud of just XX%

environment with and performance obligations, QX $X.X currency year-over-year to or billion, constant to continues or of XX% X% proposition an environments. enabling dynamic RPO, their growth value remaining suites secure them We IT this our ended customers basis. simplify in a transform, on with Our increase resonate

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

million basis. QX X% billings were up year-over-year X% of on constant and a $XXX currency down

headwinds was QX. $X exchange QX points. billings rate renewals yen of FX impacted or billings were also to particularly from dollar Japanese QX our anticipated, by high result a volume As million basis impacted U.S. approximately of in the XXX by early incremental

expansion lower was heightened Our was net on at retention This end rate our within XXX%, by existing scrutiny of expectations. putting the pressure QX customers. slightly seat budget driven than

per by continuing driven customers seat we QX, Enterprise to to improvements price continued Plus. to convert achieve year-over-year in However,

and our strong annualized criticality at and X% stable Additionally, IT overall stickiness our customers' churn rate demonstrating environments. remains full Box' in

rate flat with our of We year. the remain expect retention net results and both full QX roughly throughout back churn our to rate this our half

driving over rate returns growth churn higher retention our our pricing continue we're net levels, more to of and confident as normalized seat expanding innovative products best-in-class rate we suite a that As improvements, and enable full will time.

at Gross XX%. of points guidance in and in came our margin XX basis up a ago XX.X% year QX, XX.X% from above

running cloud our Aaron complex to began As expansion. of We a of and the undertaking mentioned expect several years end be critical fully strategy we public earlier, driver QX. this gross in ago, public is by margin cloud migration the

expanding in of FY beyond. our data continue we're center we in ability to wind gross back As and margin our expenses architecture, our optimizing the and confident down public half continue cloud 'XX

QX ongoing our once entire revenue a million paying delivered increase off. all $XX income was in cost strategy exceeding with business by in overall operating XXX of discipline around points. location to rate year-over-year, gross up $XXX resulted QX profit basis XX% growth X% This our infrastructure optimizations, again We million. efforts in in low-cost the leverage across and QX

of a from Our the XX XX.X% up basis operating was points delivered and margin we points XX.X% year basis ahead XXX guidance. ago our

end a EPS improvements from of constant currency of as $X.XX high the even and our negative non-GAAP $X.XX ago profitability includes As above a a guidance. are QX, result, our delivered stronger underlying XX% basis, EPS diluted in QX year a impact FX. up $X.XX $X.XX from we On

our profitability. Importantly, marked GAAP of consecutive QX fourth quarter achieving

period. ago which calculation, Capital from flow include to from and slightly ago I'll XX% million, QX increase last our sheet. the flow our in $X QX, in flow delivered million, XX% we balance now free in cash period. $X increase year. from free flow from In $XX we turn lease a $XX in cash million operations year cash generated $XX a of of year the We of million, up million $XX million payments, cash were

wind quarter, completed down end few public this capital lease of payments the our over quarters. expect cloud next will migration the we fully by As to be

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

repurchase we of plan. XX, remaining XXXX, current share As under $XX July approximately buyback had of our million capacity

authorized plan. an recently of stock $XXX Board common million Our Directors additional repurchase

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

The reminder, includes rates. U.S. guidance expected FX approximately of Japanese current the is headwinds, following assuming yen. impacts primarily a the generated of in revenue As one-third exchange our outside of

fiscal For representing range revenue of million the constant in end quarter to range X% third the this we million of X% high XXXX, anticipate $XXX in year-over-year growth the $XXX currency. or at of

anticipate be macroeconomic flat our on expect roughly QX expected basis environment. the year-over-year, billings growth and to XXX FX due We the from accounts benefit includes we which for that pressure seat an point to continued

payment be reported that had currency, in unusually This particularly last multiyear strong of last difficult be our of FX, QX expected prepayment. roughly for expect X large comparison year creates we year, growth growth constant in billings payment rate in note mid-single-digit we our normal delivered I X%. more by customer payment year-over-year XX% would the and durations, of would normalizing a driven growth QX a and including durations QX and to billings range. durations, QX billings

We be than growth QX higher revenue anticipated our growth rate. QX to expect our RPO

gross QX margin roughly XX%. be to our expect We

lease trend QX As data be and gross center XX%. payments expenses expect roughly to we capital our margin down,

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

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

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

This also impact versus macroeconomic results basis. XX, challenging prior full the constant representing the environment, range growth XXXX, our a billion, expectations. billion revised revenue the which range year-over-year or $X.XX in 'XX of X% For FY in we to ending professional of revenue lower X% $X.XXX January fiscal on currency services the reflects year expect now

impact points a FY revenue 'XX to negative rate. have growth expect roughly We XXX of to FX basis our

growth the by basis For currency we to points. now billings full-year approximately anticipate FY headwinds our 'XX, XXX of impact rate

FY XX.X% an our in billings FY expect FY 'XX as-reported be growth 'XX from our 'XX. expect We up roughly margin to X% gross be on rate basis. We roughly to still XX.X%,

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

range the be in the be to the to EPS our to of versus FY expectations of non-GAAP raising we XX% $X.XX GAAP to expect $X.XX the increase a of in the $X.XX, range are range EPS at low-end We and FY 'XX the of in 'XX representing prior $X.XX. year high-end $X.XX

diluted approximately be expected average Weighted shares to are million. $XXX

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

on our flow, As year, ‘XX the flow the revenue an we XXX we've impact outlook FX headwinds of a revenue growth basis the billings to throughout free cash this our be FY revising basis, revised on target from result growth as-reported plus roughly includes a experienced point margin cash free headwind FY low-XXs are which and ‘XX of FX. in for

continue will remain this navigating environment. recent impacts and investing outlined to while growth the long-term macroeconomic difficult of delivering We maintain rigorous savings against committed We Analyst the that most at we to in our approach cost a financial to Day. near-term targets long-term

of target XX%, of reiterating margin target least our We at XX%. revenue XX% our of to cash of flow revenue XX% XX%, XX% our margin and our to growth gross growth operating are target XX% plus free margin target to

long-term continue targets. environment, financial the macroeconomic the this against deliver to challenging to achieve we Despite initiatives year, these core

our significant to capital our product making to both operating free returning expanding cash margin We and flow enhancements consistently offerings, margin are innovative shareholders. and are

the to well as significant shareholder environment these positioned As we and on improves, long-term capitalize are create we value. macroeconomic initiatives

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

James. first Brian Raymond question comes of the line Your Peterson with Instructions] from [Operator

open. Your line is

thanks Hi, the taking questions. for

cost value to up I just down savings come the that's component. platform. proposition double I to a the So past the in Aaron, on wanted know as

you a side. as the on to customers delaying As guys is if for maybe looking on dynamic just that seeing a what there? are may quickly, expand has I love themselves? any cost not they bit functionality there and be little seats correlation to cost to understand seat savings Or side the are

is the equation? So that

Yes.

So only, that savings. it doesn't the drive that it that and always the is resonating upsell capabilities message to still would for licenses an might cost be has because customer lead already

abilities. have So Box Enterprise if to platform access you customer think example, that about Shield, Box as an they Plus Governance, has Box Sign, a certain utilization

depending platform have. -- they that talk that half so And But savings, other environment. allows retire fully plan or to to customers when up might they the for we licensed Plus Enterprise a maybe systems systems within the that dozen on a cost about be go is that dozen approach other

legacy something. white Canvas that well, is and to and that Box They're is just of message retiring They're talking solution. So at looking beyond I'm customer at and almost kind core for the alive every Sign momentum -- something their boarding infrastructure. looking I'm for storage Box

drive that's great. going you that retention seat dynamic additional But need rate really So the net still also to historically.

obviously, And data so that's And security, provided maybe but more that's of headwinds good platform. the by seen. overall, consolidation full cost some momentum the then to the the have muted, around leveraging counterbalances macro we've that of part Box breadth AI the

opportunities Enterprise the need impacted a in but for Plus in many as on you warrant is has put Enterprise to that or seeing the as, growth that cost And momentum value even Plus the so pretty to are just and to who that point that that's don't our why we in bring heavily proposition these capture expand necessarily help number seats offerings capabilities of cost really those Yes. even customers, -- a adoption aren't budget really is this enable suites customer. order seat and as do in more continued healthy on the bring challenging of in showing order environment, IT consolidation in resonating, it savings still that, is cases, scrutinized finer previously, to been

maybe That Dylan, for makes a sense. it. And follow-up you. Got

the half old the new versus seat the guidance? what change dynamics second on Thanks expansion the second-half the you to outlook did understand understanding for in qualitatively, changing guys. side. guidance love Just I on you outlook. know some I'd mentioned

Sure.

that the dynamics So including net takes challenges, this say I high the on and the certainly, QX would into macroeconomic level, at the account and pressure seat go guidance rate into that continued results retention a all count. the

customers and the IT stabilization that our several we while challenges to our mentioned, takes encouraged building macroeconomic see are that spend, enterprise now healthier quarters scrutinizing environment we're dealing but levels are So in and demand we're earlier as year, seeing close the given also to with that we in than still at by starting the typically pipeline sales cycles.

So the I includes little it's driven due would expected picture, We've consulting Box impacts. business which say big year-to-date, primarily macroeconomic in professional by to bit reduction as performance actual expectations a we a and noted. seen our also services, of

you. Thank

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

Your line open. is

Great. on little a growth. the for question. more to in bit seat Thank the Wanted dig lower you

it's Just enterprise, to then note across SMB wondering a I both widespread, if follow-up. on if it's anything and And have geographies?

Yes.

affect headwind, I does we general geographies. macro I the of call, the is in and across a think, last -- as while think companies sizes noted range

there's impact had customers, in strong an incremental I of some business smaller the the necessarily haven't some as non-Japan past. of where international think in pronounced we engine segments of the

And the quarter. incremental, other areas, to kind a of, so kind we last of bit to had similar we the of that's in where very headwind relative little see but probably call

August. into was on I linearity May then through you Aaron. to Great. month-to-month walk from Thanks, and And could then June to of sort July hoping

dynamic the Thank how month-to-month? you. trended wondering seat contraction has Just

too quarter. of from seasonality, say see what anything Sure. see overall I different I we that didn't terms would in the a in typically

the we shaping up in same back is to So seeing that kind loaded bookings, mentioned, are pretty environment. kind demand of for pretty how but of see expecting of stabilization based see standard end And as and much we more do us quarter that's the then any environment. on noted, current as in

So linearity fairly that has of been consistent. kind

standpoint. would And the just linearity from of is I note just only the yes, being thing same a more

linearity Yes, from correct. standpoint, a

Okay, got it. you. Thank

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

Your line open. is

Great.

you're the both seems persist so, and of the second-half conditions seeing macro headwinds churn rightfully just will kind So conditions now, remain otherwise, and net the and of it of consistent. and assume about will and right the you relatively retention year thinking in like kind

year, head and into the you about next know As in I even revenue kind the of formula free cash we growth low-XXs. flow talked

of I the to actions is margin don't you're if seeing macro there persists with the obviously, know the margin if form headwinds even gross there? more kind operating and plan the in potentially here. commentary of alternative some a cost or But the cloud move or to that's seat accelerate leverage persist, an Any improvement

mean as confidence sales marketing levels ability macroeconomic notably, gets what and signals we'll I and drive of dependent overall much we're investment. ultimately to I seeing the we in and in the on growth, the plan, looking environment demand share the certainly environment our Yes. our is at would say to our impacts that most the kind of way is will that set be more that what new closer the year very

more as decide certainly, that's biggest create we expansion if those So that margin a describe to could additional to some the investments. variable I operating approach prudent would the and in what model, take

call as level out benefits because we'll an margin up that we're of of accelerated big secondly, on would line that noted cloud is then expansion the area this an for fully the you the And margin it, more wrapping and especially, realize year. area, public the gross migration

Yes. just I'll build that. And on

from as making the top growth having, would side. lead build, see to still out, headwinds think I macro think definitely pipeline driving line we're conversations we're Dylan the standpoint, think, a us we sure do customer while I healthy called I

we certainly on that are offering I driving going seeing albeit level we're into a road just conversations next whether the toggles, about So healthy focused it's as more early, as result momentum much product keeping a map, of think our our the suite these the of year of strength think demand. AI we're

thoughtful I that. would sure So about we're make that just

then follow-up. just maybe Okay. And a quick

we've of to lot revenue. had So it's the almost cross-sell XX% approaching upsell a -- of in of or terms transition just plus enterprise majority, kind of now

I year-over-year. huge improvement a think it's seen

or growth a lot potentially driver of will figure And But monetized out we we've really, price trying from now another a another growth acceleration believe like a there's plus, if uplift. characterization? just a to ahead I'm is kind don't speak, that growth fair that double-digit be of packaging enterprise business that a seat it So I again, so Is if upon growth. already. standpoint, to -- seems revenue dependent know this

called that the called that what head as think of tailwind is the we've I we're about a of we stabilize see plan. still plus portfolio rate our to out kind product growth But of as healthy and kind kind coming out think we've year-on-year on and enterprise seeing to expands. as certain at of we matriculating a customers, maturity

have anticipate additional the We future. plans in out I called that higher-tier would

because time product road haven't we whatnot. very unannounced that and But for exactly we that sure we strong making new offerings timing some a can to relates map thoughtful where So we're about a products that of we have talked that multiple or new about bundle point of customers. our with

another seat then another becomes price And then happens. think, again, platform kind that count And obviously, growth. API will, seat consumption an And is driver our additional per of that when growth I growth be driver. lever. of

of vertical of feel very, and consumption, engine per optimization. growth have the the kind market seats, and of extremely seat, very drivers price overall between on bullish efforts we're portfolio platform confident we kind -- So to various expansion go just

forward. So of levers multiple going of levels growth

you. Appreciate Thank the color.

Thanks. Yes.

with line next comes Your Blair. Jason of from the William Ader question

open. is Your line

afternoon, Good you. thank guys. Yes,

from wanted to end over at how feel of of today, maybe macro. it's until like commentary it to last has of months we as look improved eight year just try just on can -- you demand the what's historically let's say, And changed the signals. from, sense last it Just some your do make

of about talked you traction some large pipeline, good customers. talked You with your about

AI. interest punchline if continues in a about to of talked Or just all? can actually of feel demand sort environment You kind is be muted. improved But you give maybe at it the whether terms you just us of in

Yes.

QX et increased into is as where trends, headed and added think business look coming qualitative that this into macro and saw. of I I wins, the big QX was verticals, I into to a saw the up that deal the and expansion, more was customer started we backed our we at this sort pressure when of year, the of level, the year go from last sort at flow sort the year's cetera, we think ramp-up our by

Dylan we're the that I sees impact. this fit. I of initial period think that at But now We're build let of -- and he year we're lapping think I'll as on stabilization more that.

that. And of positive coming on result year, to second-half the look metrics of so basis, into a you start multiple kind we of of year-over-year the as improve see when some the signs

is really the SaaS represented, at I can little point also build every nature single in conversations a care, the technology, up of we're think macro we're and the industry you just services, the trend from the shows kind SaaS it and having, that industries the really customer a sometimes just XXXX-plus dynamics, look have be you of of where model at -- both but offset color that the that the pipeline our board. numbers. fact kind financial Obviously, it's dynamic But where I across a the across the seat wins, business, the health bit when of the

think been of at macro. a positives muted that but in So to count a the result muted the because level obviously more data, growth that I is our core engine seat just more there's bunch a of as has

of we versus there yet. just around about, so on to impacts year to the that excitement, AI comparing again, to talking headwinds the starting timing would bit, when show as macroeconomic a everything that just build the top line and environment, we're certainly that seen that And saying and that part not of the what would say year's I true have you're monetizing it's with but some now that we're seeing Yes. we're not out and healthier are earlier optimistic have if that's because build to the we this we've levels. example, pipeline out in see AI, going incremental been and But the of up related stabilization the to over clarify at call outlook year, called enter that for

So year that's type impact. more of a next

Okay.

a of they continuing to now the of fair beginning stabilizing. dipped be but the seem So to sort things year, since that have instead little kind say of dip, of to bit

right. That's exactly

they AI, on AI you there's for Box main then their right external talk where a the cloud some to And app, some seed of to for kind sort you ask app -- and talk just correct? standpoint, two use external Box consumption leverage One price to right. of an kind a All you content add box methods this Is content. of where content. API Aaron, And can monetization would Okay. be think from that is uplift is wants of to monetize. then secondly to it kind people where the functionality of API to questions

right philosophically. the way to about Yes. it That's think

And note or pricing the just where per component be that former what But those yet and haven't component, may platform that right will I'll that of the that look may component there's announced driven. like we a Box will a of product Those dynamics standpoint. a packaging included. the On from then be -- pricing manifest seat how of ways are AI to the that some part have more not functionality. set will AI of will there's of think consumption Box about

to when have timing specific timing of general you will around of or any any any or given start to things kind be material contribute these revenue? And

Yes.

I is lot platforms the a timing we kind of are, given that and other – of software generally, the haven't is dynamic market We I this the even because think year the enterprise is of as only the at getting rest look built. technology where where think,

incorporate as about from and I they're as starting how think well organizations, workflows to an into this get are going their think IT expanded customers budget standpoint. to

an called be just probably Dylan out, as think for this I year's element more would So plan. next of

certainly now, like? of everybody CIO customers out -- AI of they because of with a what as vast their where can that significant us is coming a right And imagine is just cases going the majority out Box quite you But are data, houses their most the we're to work to portion what strategy important different platform be that driver the use excitedly AI. it's look trying solving are figuring can a really conversations that having to

Thank you.

thanks. Yes,

Your Pinjalim of JPMorgan. Bora line next with question comes from the

is line open. Your

seeing. Thanks the on great. their of like it to you the to wanted headwind kind ask all? is of own coming at Aaron, companies for In Is Oh, in fund a that AI your taking part by up conversations question. you're feel projects? that reassessment conversations, I do macro of budgets

maybe collaboration somebody's we see their could or seen I showing But that pipeline would we maybe of that use. but services workflow in impossible, general say because me. up that some That's very to and infrastructure AI to direct any of that We I a maybe the budget has they is to tend budget bit impact haven't happen. be that. only that of look not have we be platform sort deals to orthogonal seen near medium-term content of sort tend haven't cases for against at of dollars maybe not it's to customer getting, the for up the a the kind that use shown management expanding -- that

Box I think to point that's that? at or So Microsoft this you portion don't like there's that CoPilot don't is going not going something know, to, a

say the those also because sorry, directly in of sense cases it's products than use still not would are I too orthogonal we're and in just terms that that Oh, more if new definitely simply solving.

announced integration with as our So we of CoPilot. example an just

interoperability a lot see there. strong you'll think I So of

very user on end can the conversations much component either help customer or platform through Our they Box this on how range interface in with AI the focused a customers their be to business is industries. processes leveraging of subject are

think of right budget for other competing don't those we're So I in now. domains sort

think, much is it. X X%. XX% growth delta the rate that How do on constant services? currency And point say Got professional of in driven question to by reduction you Dylan, one the from, I

It's it. recurring more the but than a of million, the on it It's bulk to is minority of $X size able kind side.

you. Got it. Thank

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

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Hi, a increases? environment, positive a seeing seeing standpoint into sense give like-for-like of any consolidation Iwanyc. digging you -- the on it’s you Maybe, gains for pricing basis? and a can from competitive some or George Are then Aaron, holding standpoint are us you a

Yes.

deals, seeing deals a are at, kind on and that look again, an component Canvas in We're of with save are Sign I of systems $XXX,XXX, Box and Box standard customers when technologies there we're number of where where the that technology. top customers in often able is to increasingly legacy seeing kind is consolidation vendor, this the of of organization. core maybe money a a becoming Box So vendors there's and over common whiteboard e-signature other lot

into that's folding more So Box.

see to And so happy those definitely very we're trends.

Enterprise quarter again On plans that as dynamic And see I and obviously improvements think pricing some the of past that the -- we we we same are more year. offsetting helpful the -- more as product side, the to future over sort have pricing seat of that. to well. and in some that's dynamic And would we're kind in -- Plus, did have customers of see been going just then continue move we'll

And are to you're OpEx. hiring? you're Dylan, I very looking headcount be the at mindful how at maybe R&D to you with looking But and of both continuing some the one sense you sales at point? for you. this adding your know give us Can still

of everywhere, moderate achieve certainly, emphasis of expect people. side in in terms growth But R&D We on number front, very on And track much more on the are. target that especially growth the are still the the AE and mid-single-digit then in AE focused, and in scaling we of is initial Poland percentage quota-carrying that being but range. to hiring and in certainly

Thank you.

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

line Your open. is

you see you fruit you Thanks any that? go Rishi. geographies the where were mentioned verticals feel about areas Aaron, my around low-hanging Thanks. to a that are doubling taking particular Poland question. bit key just a back underpenetrated This is little, go-to-market some down we side. currently on anything Rich and peel you're for or on there and little for on to that If after

customer would I do, disproportionately compliance, within actually we say, where that mean maybe privacy are the security, I of amount Yes. concerns the have well greatest base. areas data

did deal We life major major corporations, at sciences. financial you large providers, firm. seven-figure multinational so at And global services deal a a a manufacturers, about if think law

requirements to organization. So on outside and they anywhere have within data where sensitive their really their Those data do in have compliance collaborate a enterprise, have where -- where are customers are of highly they often that well. layer and we

upside. market, say And massive untapped every there's I would in

you And upside of to, traction so We're leads Obviously, of a healthy again, seeing sector. lot public upside that in federal lot on state local. and side. a the in

life in services upside of bit care, a sciences, quite financial have insurance. health We and

you'd disproportionate think a So of those over I verticals upside are where see the few time.

if Got $XXX,XXX I seats seems the at know little more the contribution deals, a pressure But it. helpful. broad-based and look well. a just to bit of seems to follow-up, that pressure. suites like revenue very the obviously, And as be aspect total we That's seeing just a then it there's bit

just curious, sell harder I'm out of suites environment that are to particular are or call anything So there? in any there you'd aspects this

motion driver in I sales mean customers get the it's of a think value I I commerce, sense. suites I wouldn't call in it they that suites major Box. purchase maybe even there's is think when because our from actually more

primary say, if of actually one our differentiators, anything. overall, I'd it's So

not other can about are you large typical of existing from, the like you that expanding not correlated. especially growth rates, actually directly talk on the separate those some two maybe closely but who deal growth. related is impacts, customers, pretty seat are have actually And also Yes. to at it's clarify, just their customers to when

the So but growth actually of a a separate dynamic largely function not that's seat dynamics.

Got it. you. Thank helpful. Very

you. thank Yes,

Thanks.

with Your next Steve of Enders question comes from the line Citi.

is open. line Your

I talking are do use utilizing other there know, share you talking you in rate players like great. AI more angle question. you're are to customers what have, Okay, you going guess the at customers to those kind as taking ask lot this guess the thinking own Thanks bit how I point for out AI Box and -- cases win versus I AI. a that want I And you're of some some their about things. how on about view guess of within after? a to the are investments

Yes.

enterprise you're this be have on you're this an to will if we anybody think call, but I to also almost surprise software, So assume a AI. in

you its cloud, So point, it's to kind AI about mobile, it's think in at is almost have pervasiveness. of -- this

is of software workflows going kind workflow. in map that heat And to and relate enterprise a or platform there's data a that how sensitivity like to then technology. kind company does does set what and much it's almost of So that of of AI and have exist all architecture data

amounts in models of this text to by really and we've so amounts large language things talked the of past, definition, And but about and large really, you do see large documents. powerful text

of And automate documents. that so are very tens understand content, that kind house extract metadata helping of workflows helping question, to ripe tens and of billions files that win right customers within around those for from we it, AI helping

so from win think And standpoint. an case AI I sort strong related use content our right of to that is is extremely anything in

of few weeks or human. examples, customer today come or you equity those in And an so or human, the to they insurance a could read a just maybe have off private a have firm or have estate conversations, company in by leasing invoices where two documents large past real by organization a that the be rattle to just processed contracts a of

the all using heavy language automatically can way very either extract models, a again AI. interface data in our lot and manual to APIs has lifting Somebody large a that of through do or

and orchestrate around AI workflows the content in data other natural as for so the platforms. And to become already in to by that that around the that the models that business opposed to model, because plugging shipping just content nature we we cases, content, well place as of our manage many

customers where implement that a we think with in of having a of customers, it's the the very like win ultimately is all of target and to zone. components necessary from center sense, educated journey the the upside of it, platform building how that right of in right standpoint. of I some our And model pricing the out then getting business sort on to share now can performance So

go-to-market to in partner how viewing, on some leading do out I efficacy are to it signal some investments? marketing the initiatives, of that investments, seeing you sounds also is making there. the those is side. that there like initiatives this the vertical I turning more maybe incremental guess, I on focus of there you're Or hopeful Helpful context at some the and you're time. expanded guess ask want expanded those with the

Yes.

business. ramp So year, tend going I budgets because strategic kind didn't you or ago that of think macro not this now having their that down up -- where of was six if of into as how with where know customers saw planning conversations again, color it and pressure -- at months going the at maybe many on you -- and to their macro go cycle, much the is that the they start daily industry or customers look as have to we and customers, their the affect initiatives initial the to of that's nine

to the on in campaigns more we we're with of throughout long-term now dynamics going do? city where I right be to And think more to think are customer starting rate talking be going the a look oriented steady some making is signal I right the the the like so initiatives of about, IT have year? to field are talking okay, we're their now drive going gives put been what major us emphasis clear. conversations ramp and more trend kinds kind dollars see and That programs Not like you've and marketing interest the macro year had past okay, events, is to stabilization having inflation kind it's next up months six necessarily, of of to where of degree but and really of sure from conversations. driving every we're what ability rates again, strategy they that digital like that, customers to can the capital

was going bringing works the we're planning We're focal works I a having out point this it back us. person I is this But because CIO biggest continued conference. on for yet. CIO calling to in mean, Box be digital October. Box's

level that and driving pipeline. of think right sure enough I conversations seeing demand that signal we making the we're warrant are in so And the

Thanks the for taking questions. perfect. Okay,

Yes, thanks.

Q&A closing This back call to remarks. concludes the session. turn Cynthia now I for today's will

everyone. you, Thank Great.

We'll for we sending us mentioned, Pacific everyone, shortly. holding a time. Aaron As Again, October more you, are on p.m. today. X:XX we'll joining XX, and be BoxWorks out details investor briefing virtual at hosting thank be product

call. concludes This today's conference

disconnect. now may You