Box (BOX) 5 Mar 242024 Q4 Earnings call transcript

Good afternoon. My name is Krista, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Box, Inc. Fourth Quarter and Fiscal Year 2024 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Cynthia Hiponia, you may begin.

to Conference Quarter Call. welcome Fiscal Full and Earnings XXXX afternoon, Box' and Fourth Year Good I'm Hiponia, Cynthia Vice President, Investor Relations.

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

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

will audio only. be Our webcast

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

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

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

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

margins basis margin and execution how integrate of our are Content still achieved core and markets. points operating 'XX, throughout IT We we advancements new to significant advanced that collaboration with our of capabilities above launched we we unveiled was as security budgets, their to of surpassed for currency. AI in above content 'XX, content we Box guidance million, We despite annual Box place with natively billion in a of the in put were up integrated QX above market. platform $X workflow persisted revenue expansion, results category-defining our line enhancements and suite beta, a on budgets ago, reflecting $XXX AI, year-over-year securely durable long-term in of XX.X% see our And cost were to our XXXX, partner margins product and while several we of revenue, fiscal models or curate also structure $X.XX of publish guidance. In knowledge Cloud. We the in IT continued FY across ecosystem up from with in constant lower X% we XXX EPS further our guidance, fiscal made in FY signs year which while revenue strategies X% our to stabilization pleased cloud $X.XX bring in pressures Our of investing our ability continue Operating XX.X% or end the AI our Box growth. In deliver and integrations. companies of the transforms and high into Hubs macroeconomic enterprise. strengthening Box XX.X%, which of to compliance, the with in also

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can run their most metadata-driven how automation processes. companies our of fundamentally transform the AI, our With combination we workflow advanced important capabilities and views,

January, the Just enterprise applications a Crooze, no-code in Box acquisition content we management the announced of of leading on platform. built provider

Box' industries will and were with leveraged advanced and workflow cases for and enable most management like For metadata custom with to We Crooze, APIs and leveraging capabilities to integrating controlled interfaces important up build team use years, documents and be enterprise life help no-code out workflows app more. cycle we contract in rapidly and and builder customers the company's working management content. Crooze content thrilled their asset regulated management, has digital to

Gen improvements, including to this Crooze, will and natively end-to-end solutions. customers customers processes the to us current expected use and Combined cases Forms having do Box without with automation launch within critical as power extend into any our upcoming Box' Doc to be year, new business custom able workflow replace Box acquisition will development. as the of legacy And enabling rip well with ECM of

is content AI. Importantly, management age-old of processes power how companies their radically to structure Box are these problem An unstructured business enriched in the can apply with data.

scale, Box, to In we new customize for seconds FY to to the 'XX, performing tasks due Box been we cost invoice to to differentiated near customers efforts work dramatically minutes an expect doing critical documents that Box or content a only have took to at having AI the label of their labeling instance, advance extensively With cost. By Box content and automate security, do help APIs. Not automatically in be by now new enterprises impossible data process able that and overall our intelligent or to digital of Box variables humans questions our an AI asset a leveraging and throughout tasks image. in For Hubs, and and building enabling diagram for key highly content, platform continue our more prohibitive on governance ask or will AI workflow like contract can Box. apply of from or in a are business would AI models needs, incorporating metadata AI a capabilities compliance inside extracting the or Box now architecture AI previously. on product you these workflows AI, hours, fraction

the integration tech across of R&D by with AI announced compliance AI new groundbreaking brings we collaboration privacy for Azure from best that means we technology. for of security, approach in to enterprise-grade so Box and OpenAI. standards customers. Consistent vendors Microsoft's platform-neutral Box today, can tens AI can of user advanced various this with a this with customers The happening dollars the provide approach, experience to open Microsoft benefits realize billions leverage integrating and Our models expanded

Box also Enterprise Plus AI, with which customers security leading out employees. number in Plus are AI, technology use this language that they starting as AI. posture to for at access access company, to to looking metadata Enterprise by existing enterprise-grade their and of compliant. unstructured customers today. Since database AI upgraded extract Customer value in Enterprise X-figure and Box to to Box content AI a organization Plus of Enterprise We trends upsell a examples American gain expanded QX Box, most also With managing have all the available to plan in secure applying a large their cases customers we to from Box controls. An and access in can agreements Box Plus to with in models, is improving bring content rolling leverage on upgrade while advanced company generally keeping to contracts, scale, QX meta their AI new the AI their to powered monitoring include announced beta to construction seen multinational November, classification

it upgrade one clinics content, leading medical support organizations that to curate quickly they to new the out summarize support. analyze Enterprise use amounts to Plus to report to Finally, AI securely of data of Box and vast country's

recovery advance to integrations more achieved and high advanced data on power compliance detection and protect native ahead, deliver with building our to our enterprise. AI, leading remains delivered data, beyond this In deeper the the the improved way ransomware help attacks, their cycle we life threat like CrowdStrike. protect security workflows, solutions, offerings deliver archiving in important vendors FedRAMP customers going full to the govern focus year content plan and security most from governance our Now year to

to APIs aim help and to for Box. customers continue customers we flexible that our with Next, a and Microsoft more, app Slack, interoperable every open differentiator major from our our our to and many Salesforce leverage applications and remains use, our and own Teams platform ServiceNow workflows. connect their with and power and And to APIs, IBM enterprise

to go-to-market. turning Now

digital business Plus full a leverage with customer on Suites platform increased in We enterprise Plus to platform, entire core XX% continue X-figure over to included customers across of adoption they who to also the QX. Suites solutions. expansions QX, management deals year all offerings deals fully of enable firm We and financial Box their Box a from solid Enterprise their in of management firm with a recognize geographies. agency value will as deal, represented legacy go with In and purchased eliminating consulting new spend XX% continued content to wins large $XXX,XXX, Box attach across while existing multiproduct rates the enable up ago. the Enterprise saw our

how support data a regional security, This purchased to power international to use, law storage, led external looking integration with of parties. new firm document solution top internally ease was that them which a they for Box. Next, management Box and work organization provided and

models our go-to-market and content, chapter As a solutions this doubling as bring plan extend add set to and in development will to public financial to we FY integrators key motion platform 'XX to customers, of our as we new intelligent our and upsell drive workflows international services, customers platform and demand growth. Further, enter to further our prospects, advanced more honing packages solutions life verticals ahead leverage we pipeline deliver more to partners new sciences, even as gen we health and power and more care and such around on system to to a and more. customers and to look deeper and ignite reach programs beyond pricing down markets key new sector, the drive to further focus

advantage being the future and taking to on accelerate market Box. us, of We growth revenue these focused opportunity made of are are and investments of the focused in front initiatives go-to-market

excited in can we innovation we are delivering tell, incredibly our you will As to FY platform content the 'XX. about cloud category-defining be

road product more investments well returns. normalized are initiatives, robust in winning a IT Our driving our for map, the us positions megatrends go-to-market IT for combined decisions environment spending strategic that with and

long-term differentiator durable up to will financial will be but accelerated as be resiliency the efficiencies company of progress could us drive more Analyst our to not We a how the our during growth. drive has growth. Dylan continues on growth to to business, while initiatives March our in our Financial for detailing execute also his continue of Day XX. We revenue and leverage setting revenue our ourselves in on the providing detail structure strategy we on be prouder continued been in driving model strategic cost our invest across comments, upcoming

changing gets the is Box well content to the cycle work more Dylan. these over the to hand life power As on in that, is capitalize than I'll megatrends it ever, and of way full done positioned enterprise. With

Thanks, another while points 'XX XXX basis year. $X.XX delivered for line the or points generated EPS of we up year-over-year long-term delivered everyone, from X% margin currency. the year XX.X%, bottom growth. XXX basis us. In in laying FY in operating up up currency. $X.XX, in XX% We billion of and fiscal in constant was thank prior non-GAAP constant up and We you foundation profitable revenue, afternoon, Aaron. $X.XX year-over-year for XXXX, Good X% joining improvements strong

$XXX also deploy share a year-over-year program. We to enabled cash flow, million in us $XXX repurchase million increase, XX% toward generated free our which

'XX. As sequentially total FY a result, shares in quarters diluted we reduced fully outstanding of all X

disciplined macroeconomic to focused As generating challenging we on a navigate environment, strategy. consistent capital and higher remain executing expansion growth, allocation we margin continue operating top delivering this line

or We expectations currency. delivered revenue constant of margin X% in XX.X% million, operating margin Operating basis to above EPS and X% our $XXX our up with QX Turning year-over-year was QX. guidance. line and revenue XXX $X.XX the year than our guidance was X,XXX paying EPS of higher total high was XX% points $X.XX We than ended us guidance up $XXX,XXX year-over-year. and the our with more customers XX.X%. annually. of end approximately of above in

We for higher-value continue demand offerings. strong to see our product

RPO their XX% Suites from XX% of Suites attach points QX year landed infrastructure. part up respectively. as environment revenue, delivered rates X% a now billion, from the growth, year-over-year year, were and account This rate help of significant Box constant remaining basis enterprises at large or where of back our Suites Our in with XX% demonstrates $X.X performance to XXX a QX both in and customers' increase our customers deals longer-term them simplify, or their growth a commitments of recognize QX we are QX ago. in basis last as performance obligations year QX. the in that IT XXX budgets X% the a tighter, core XX%, currency. ahead These from improvement points half this of and Even for ended that our XX% well stronger in secure value the to in of offerings content. We as bring revenue transform

driven We our by mid-single-digit recognize were $XXX months. QX XX% RPO next the roughly renewals. expect above to to strong of currency, of X% constant growth billings expectations XX% low year-over-year our in up of over early or XX million

rate at retention XXX%. of net at landed Our end the QX

the per budgets. full pressures achieve we value provides. our We've seat stable increase in Box While seat also despite year-over-year the rate and pressure expansion continued continued on the our to within stickiness X%, on an price IT base, at demonstrating platform customer to experience churn remained annualized that

results. our Based out reminder, our XX-month in net metric. line rate a a on above net slightly headwinds retention a are rate FY with QX XXX%, FY 'XX retention the exiting that is rate net bottom we experienced our or expect trailing now we we As at 'XX in with to retention lapping,

Beyond introduction time. to margin period. over product rate line to more we in FY planned and tiers, XX.X%, as the seat net gross and 'XX, growth with year retention of QX as from we higher in roughly the at a ago new came achieve returns normalized levels, offerings benefit expect

infrastructure As a QX. in cloud the to reminder, we fully migrated public our

As of gross we coming to additional center the over the on-premises down quarters, FY expect 'XX. our data course margin over wind deliver expenses expansion

We engineering improvement in excellence initiatives constant margin also we center through continued and year QX XX% strategy the year-over-year, management. to drive will business leverage delivered cost our in last of and majority up have our Poland, across XX.X% discipline. be from currency, employees the significant in XX.X% of testament operating our rigorous location in and year, cost resulted lower full-time the now an a R&D to in expense XXX in the coming of Poland. These XX.X% in or hiring our disciplined We

delivered in a down year ago we X% QX, million, a $X.XX $X.XX lease payments, a our from on flow delivered in free we XX% result, free currency of compared operations million constant with we and generated turn We which million period. Capital In of cash our sheet. $XX to million in As $X flow cash year from balance cash in decrease from of ago. I'll a of from the basis increased were ago. QX flow cash million, calculation, $XX now flow a EPS $XX increase $XX million, include a $X.XX non-GAAP QX $XX last year year. or

as public to we the down quarters of strategy. managed centers wind We our cloud exit data migration next over lease our expect payments few part capital as

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

million of 'XX, million the of in flow we or $XXX For generated the X/X approximately fiscal free FY for shares we repurchased the year. cash year approximately X.X full

As opportunistically like remain XX, repurchase of stock under Directors plan. With to fiscal that, to capital we of our capacity would our and current million We recently XXXX. additional our had returning XXXX, $XXX to share Board common approximately turn plan. buyback QX million I shareholders January $XX of guidance our remaining committed authorized repurchase an and to for

As following the of outside roughly from exchange X/X of of U.S., impacts current expected The international coming revenue assuming revenue approximately Japan. the with is headwinds, our of our generated guidance FX includes a XX% rates. reminder,

markets, stabilization our 'XX. of seeing are our budget reflects IT most of in we a constrained pockets FY environment some While in continued guidance

international the consistently profit, against beginning on generating and tax we international 'XX, GAAP allowance are impact noncash now EPS. U.K. non-GAAP the in FY our be as QX, businesses recognizing 'XX deferred FY our in in Additionally, which will now our have in deferred generated countries, profits expenses released valuation assets and the tax we will

We QX and year. roughly represent expect impact $X.XX this to $X.XX the to for a full

For the first quarter fiscal of XXXX.

million QX year-over-year $XXX expect to rate the revenue range to growth past quarter. in basis, representing $XXX We growth or this of the a constant on delivered growth million, X% be currency above X% we both

growth of the FX QX to includes We XXX approximately single-digit headwind billings from expect an expected in our This low rate range. be basis points.

We year-over-year roughly our points. of expect be a roughly representing XXX gross improvement margin to QX XX%, basis

XXX to currency. expected QX This improvement of basis our basis XXX point be operating constant improvement negative approximately point FX. margin XX%, due to non-GAAP which approximately a includes XXX a expect and year-over-year We an represents in basis points impact

increase high end million. the QX absorb in EPS at expected to of deferred range earlier. I be a approximately even XX% shares the tax Weighted are our non-GAAP this expect that diluted XXX mentioned We as $X.XX, $X.XX we be of year-over-year range the average expenses to to

currency consistent at revenue in FX X% January range anticipate of $X.XXX X% an end the range full includes XXX growth headwind currency. basis fiscal ending points representing a constant this and in high For our to $X.XX preliminary basis. the the XXXX. of This year-over-year constant of We is year billion, and approximately guidance on expected roughly billion XX, from with

growth roughly basis. be as-reported on We to revenue FY with an 'XX billings rate expect in our growth line

We points expect of little negative to billings. to XX FX a basis impact have than a more

more to margin gross 'XX than a XX%, basis representing roughly FY be year-over-year our expect improvement XXX points. of We

up expect results and basis a and non-GAAP drive sales We expenses XXX point marketing are growth, from 'XX improvement future our last approximately be stepping of XX%, year's to our representing XX.X%. FY to operating we margin

negative guidance more little guidance a We expect line from an on our FX. of a FX This operating expected preliminary basis to incremental than impact in is have with margin despite headwinds XXX points.

X% FY tax expect be to previously. deferred non-GAAP in expenses end We to approximately increase 'XX an that impact XXX in versus Weighted the $X.XX million. range the and noted the expected of high shares range year, $X.XX the $X.XX I be prior of includes this from EPS to $X.XX, at are diluted average representing

growth an the revenue headwind be from we free low I FX cash than currency our in 'XX mid-XXs to FY previously. the revenue the margin, FY which and points with expect Finally, a combined rate, as-reported on our to XXs basis constant and of combined more billings that basis includes basis, flow 'XX in XXX little discussed on a

trends stabilization encouraged the on light are quarters seen budgets in saw have by 'XX. even the last IT couple of in FY in we pressures that the of We macroeconomic we

'XX mentioned, map of focus is Analyst for entering our to programs, take FY gross we details on our Aaron capital Aaron questions. Operator? Financial workflows. To look AI-driven happy laying go-to-market and our strategic in processes I your be our shareholders. reaccelerating take and business that, around foundation in Tuesday, innovative by investing operating this and revenue advantage road March efficiently the product power new Day We at returning chapter opportunity, As further and content virtual providing to a are XX. With margin expanding will to to and forward growth

of Stanley. Josh from line first from [Operator Baer comes Instructions] Your question the Morgan

you about ask market, kind compete Box are think the cases e-signature thinking to did use you interesting way of space. around the a limited on invest evolving more that wanted with sort the acquisition in in centered to And development app that content? of Sign? of to what the acquisition getting significantly maybe about then good Crooze. Very no-code is really there, into expecting acquisition versus about I How

Yes. Thanks.

So really, great really clarify. to important and point

on content-centric So custom interface XXX% sort workflows. of Crooze focused and application is no-code development for

squarely we cycle have content, market. But management, about management. processes have GxP-compliant invoice around asset document going you processing, to remain when business on focused you the kind of workflows that management, the digital controlled So life enterprises are content and contract think

if so of go off we've hundreds, of thousands, the And And there's customers to traditionally, content-driven those and our not kind around have that cases use around those workflows enterprises of build workflows interfaces had really workflows. have Box.

And so use you had proved Crooze, to of types do of no-code independent of custom kind app development Platform independent a cases platform really as the environment. case out kind an of -- being and as of Box built in use startup, out some company, environment. The a all other these of on kind the

having in able obviously now about And more within go that built sharing is anticipate Box. be a we'll natively year, on interfaces technology be of the will product our on custom very into applications got integrating to excited Box. And that technology these what Crooze bring we really them throughout we native releasing that on then top new the quarters, we're and types customers and And about fiscal product create much fashion So their and let of a of we'll year. the doing technology this coming board. being in kind

as market estate it kind portals. that using what customers so far from players that commercial estate are -- use anything seen so lease And base Crooze is, their There's for core contract in from commercial customer real again, of management. real there's their portal any for we've the major

which are of on the selling that be number And the kind standpoint, And as Crooze kind we our an a And kind have for users continue use that we'll of customer be will so Crooze built basis these in that, that then really integrate technology. natively while a per of driving customer vehicle previously, the we customer cases business right within Crooze now, we the continued base. or upsell that monetization the will now needs. Box seats really these model of had is implementations environment. From

using we lever of in Sign, capabilities So Box monetization but in bundled as core Crooze pricing we will our that as additional both well unlike stand-alone where as the won't Sign doing be of all of plans, well. the we included as an with be model, technology, sort our Box this

Analyst we're really do a from the couple Financial at Day in around monetization strategy sharing standpoint, a what So excited about of bit and could this here. weeks little be a more the we'll

Really helpful, to out as expenses from anything impact revenue call as Aaron. And Crooze? just this to far or year

Yes.

So into the sort model of everything just is laid we out. built that

be make decisions, philosophy around will within and technology. in this the go our out. envelope we've how given to already We the team, laid obviously cost build certainly -- out But but we R&D investing certainly that will be prioritized that

growth that medium it's development kind and application and -- our replace as enterprise expect spaces of expand and no-code metadata brings the it the provide I think them that from plus the combination Crooze standpoint, solutions. we're no views to and these can what for sort But say rip a important, technology in is as of of tailwind front. And content of Box, long back customers, to more then see AI you you a management of revenue very strategically overall, rate out So on from really a in what's happening, more a we if changes why term kind that pure that standpoint. step together, really building with growth this what cases in workflow. And is into well the in of combination go new letting deliver Crooze a doing ECM product legacy chapter our of use real year and

effect to we're to going there combined of kind that be nice a there's So drive. able

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

or your respect where adopted terms with horizontal those assumptions? have kind of And tracking Yes. Copilot' has Congrats around on you have Box' adoption other playing Box seen AI, so this are seen been instances within that of queries you're point? in have that users at of that AI, Box seeing coexisting kind of of the what maybe to quarter. volume with you far Aaron,

Yes.

there. I'll a So address the in pieces few of

as obviously, in knows, everybody in GA. the all, today is of and first QX, day Box just of literally AI So released we beta

more, some a was adopter-type the early looking say, really at it were leaning were seeing for adopting of let's We So in use past it quarter. the that lot of customers cases. usage pattern, their the

of summarizing set cases, documents which core of functionality documents, the have of first that. dominated today, sort sort from use is a user The quickly as reading extracting information we're by is we

things So to some is, quickly, cases. But the that of one, use excitement, probably question. multiple and end are documents been on ask a biggest ability feedback kind that productivity we the these of areas powerful user got we've working

multi-document the of be analysis in be in hub AI plan, they'll Enterprise on. able kind of they -- Plus inside any customers that's we're documents. have Box product will their ask That of of that number to functionality questions that plan that for So Hubs a our the in embedded working

them data, ask or case materials hubs, the in about questions are your sales then or where this set employees available these think so all and And materials use enterprise, of customers or of equity make bases of are knowledge in can base having a of your knowledge or HR to data. then your outside research you anybody can of up you that base kind any base a or knowledge kind knowledge

approach And familiar kind on RAG-as-a-service the box effectively call, customers. type so the our of right we're for going delivering to a of that's for those be that out

hub. a put inside data, So questions you then that into can ask collect any that amount hub and of

case. And breakthrough to I business structure secondarily, as the going end-user really really our probably call, extent, on data. use a productivity, mentioned is kind be TAM-expanding then kind and to it's this big powerful use productivity of some case unstructured to of, the ability So

digital the invoice asset that from to or out and an that contract so our case, And content. aligns or take a to at with use appropriate information pull That and metadata the very look Crooze a AI use directly. ability obviously,

company them with the appropriate AI is time and so loans. powerful issue metadata documents then And in and number submissions automate their our client that be API. more a ton and go One components need program, have customers they is beta to that loan quickly early business in. loan have statement incredibly that Salesforce associating right to leveraging coming completely able are our we very in read even that's They a saving extraction process example ensure to them and now through record, such from bank letting being a processing uploads of of actually where capabilities able and that our they're

And customers. you of that Box so think powerful solutions plus get to you our really start combination about Box deliver now that we to when Salesforce can to plus AI,

about the most use customers core Copilots of with as as sure our with AI then are to excited the well kind other any the productivity Analyst finally, and And on case more again, into what AI integrated space. ChatGPTs, we'll unstructured that customers products of like remains this are breakthrough of make get the doing us things data at bit document Financial automatically to we're the to more going using be going probably to so kind that using. But our And broad even a here. talk capabilities. And Day is processing is structure intelligent that focus our we're

those So better with we're fantastic for great to going kind just the use to going is cases. through products. see or more end after directly be use which and the but pure continuing even case But we're Copilot as of work content, more of a we individual really assistant business user ways productivity, process-type to integrate

And talk for year. Maybe in growth you was Dylan. much was do forward? for trough about your above going Both for X% of and ahead your constant coming guide Yes. broadly, the of Got the seems constant level as it. currency renewal, a of in this billings year those billings. accelerated. running currency seems how that guide. revenue kind very see One strong Billings of it has influence growth the it's RPO RPO quick more growth like one the like for early

Yes.

I QX stabilization execution. I'll especially fact So in a early in to to our write back stronger better in next to did overall, expect the performance that the the ahead of both tailwinds year, bit, addition the that the think see, and part year, would I especially for expectations performance, and least a say, to that, we much delivered is RPO, that at where just -- due of for first, in really address of we kind renewal we we those a what do track revenue. And of lot QX for

the and about calling net areas, metrics gives those -- while environment including is the what line the of remains future And in but as so of stability, kind improvements top we some challenging, that us talked confidence of rate. various retention

As a couple it renewals early the the of had piece, relates to growth rate. points to impact for QX, that of an

basis quarter. still currency. on point more both was into expected more been headwind, So a a we a of X than And even little as adjusting about had the reported in FX bit mentioned, expectations, ahead that constant for our going we and of have would

in So overall, in year, is the earlier see. of stronger we than just which great a QX have quarter seen kind to

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

Okay. macro on clarify consistent It is you as just just think terms that out want maybe there some I net you stabilization in of of what follow up or -- that, comment outlook, that's in Maybe kind to impact the the this just quarter the of environment. maybe of here. are the guess, in sounds I to and beginning I But about to from the last some trends. Great. with the how what pretty saw is retention in improvement kind of last guess, stabilization bottoming what you're also we further some calling assumed being to return about seeing

Sure.

with QX, certainly as overall pretty as we'd mentioned, stable describe QX. the in you So environment

we're pretty getting what that, wouldn't it a I environment. things remains and incremental a some the AI, in customers say are about corner excited on based that there in more little some and challenging life reality improvement So in of bit particular, seeing. has turned signs leaning spend really is like but

in is stronger in I What say our would QX QX. that was than execution

very that example. to it's there from that very continued in called been deals close up for those close ultimately we and great So strength us. We strong saw one quarter that We in out overall, performance expecting QX ended the didn't including QX. just U.S. We QX made strong were some closing deals in Japan a larger have a and just the public in sector

how And the overall stronger prior they're as outcome areas the environment would the with you definitely, stable kind this a same of led business, of quarters if QX. And which but we to 'XX the I'd overall what describe assuming of and fairly we're in so within just versus that say, to thinking saw year, improvements, more challenging. then we are about this look that, FY environment remains

so that are shapes where the expected really, expectations like retention, over for of to move our out revenue year with more and trailing now stability, top challenging depending net you of of through the is that either end growth, of net slightly metrics are especially kind particular, year. 'XX, or those had, QX up And and that then baking periods about, that those sort we at we see in the on like where bottom recovery you asked you and those to levels improvements the of above, which those course year, retention retention, line those of levels. And the expect that macroeconomic as we many in how expect at net you mentioned into the for kind metrics any in we're we some FY not metrics, rate, lapping XX-month

think this Suites Enterprise less No, you the solution And Okay. maybe Got year. Plus I maybe particular, on call tier, the then that's higher-tiered heard context. you. helpful around in this

of about or higher-priced thinking forward adoption plans? about guess how the you're moving I changes So the tiering in maybe any how of some those you're thinking

it remarks Yes. prepared plan. be I will a introducing briefly that call very of kind my we out higher-tiered did in

plan. And strategy, of it want is don't only will sure to we're on in add that features well higher-tier but advanced again, we have as to of this that the other because more functionality, more customers management we're not no kind we fully that some of of sense of that with Financial reason of too additional and again, we that will much the being want available, So and our it's precise super Analyst get generally at degree talking capabilities. the our you some make ahead workflow about can content color kind change more as crews higher-tier AI when Day we'll that, around, contours just yet get include functionality,

at tuned, stay Financial share and So more Day. we'll Analyst

a Good Perfect. the couple of looking hear, to and weeks. event forward to in

thanks. Yes,

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

This for is on Brian. John

there? Suites today, Just on I it was as pipeline how another curious for has AI realize color Box beta, we I'm one went additional in Just any get just but it adoption? AI. the GA impacted can

Yes.

decision. elected one customers AI Plus biggest Box healthy of a saw of we contributing move factors was that or the where pretty of biggest number So that to Enterprise into

able And where, AI content of Plus have you again, multi-document because Hubs as that kind to to for, becomes pricing as that AI companies, access to wide questions, So our into our model we they available sectors, technology. access range as Enterprise that information, a upgrade being content of well wanted have APIs. of to chose to of be size their again, summarize across to ask able on have

being the product for to are in a And So a of customers higher-performance healthy be that for, models, or your we being a AI we will continue throughout will or And plan that sense year. contributor monetize ability are -- this upsell whether prompts enterprise, custom higher-tier the customize agents almost kind saw as now custom the motion. get AI that's that functionality expect here can of even just as whether enterprise, with well. cases we -- looking sort in create ways from as in create of to that use the in additional that to those additional to we GA, kind higher-tier able that we your

just And Suites there. on overall. adoption color then great That's Great.

XXXX. Suites right what should about, think contribute Is And of to to cadence of revenue? Or hit I track think you've term, can how by XX% maybe revenue has way the we that spoken AI the the then to about accelerated that? being of kind thinking still on long of adoption?

Yes.

end we So the described saw, I and penetration going our certainly those our the year back, pulled would ago, have, to of overall to revenue Suites have and about even of a in Suites year. And and say context year, by majority full that you we just the XX% from end revenue. ahead for expectations a we the this year time Suites of launched of momentum then of a in when expected bit as which coming as now of frame the the our at we

of upsold Plus our as resonating kind being the Enterprise ahead way and well is overall as expectations, in that's combination again, that the a really customer of so reason by of who they once products, base just was And with QX. So of driven value of are few larger for big our the X a step-up full X really the customers platform, had in the Plus. to convinced sequential who E the

that faster of the so have to as that bat Analyst sold as forward a move commentary but weeks are pace move to market or of I at provide that is longer-term -- assume say then year Day, we couple We'll is ago. years expected of more being safe we of just the in and the to expectations. over. And customers combination of expectations of a rate overall it in expect certainly, the ago in a how kind been X overall, than of the customers existing the well continuing kind off would terms new So way trend ahead our

the Rich UBS. question comes next line of from Hilliker Our from

bit prepared any and change if was appetite? a your care highlighted a remarks, if strat health talk sort construction first forward little to you that of I about I or [ wondering your moving a think you maybe, for deal. ] my vertical On question, could

to cutoffs, in If essentially, there to amount unstructured secured. needs a try well, don't, but do wherever But where we of of me that best enterprise I There's do couple be and data seeing of is let data a we're essence question. really I'll Yes. little the large is my cover know. an what extremely the

that driven kind on often or collaboration a data. of security lot of There's compliance workflow. it's So a

between So internal it between or or parties. kind flow needs of to systems external

industries there. that to of out aligns so well And very most regulated the many

life in health manufacturing. often care, some So financial sciences, services, of sector, global kind public

reduction So any of kind do that a of double to lot how we -- want with. go great key some the of but mine in not as an even in additional emphasis put to through other those on has unstructured in years these key of industries obviously you these year really verticals, we and when of and more example, some verticals down ahead, work the all cases data spaces. AI, use in

automate able wealth again, onboarding a or pharma for instance, process sciences, health care management and being life in in workflows drive take, client banking to, So in or just services. for or

aligned kind you really, our that, want going it. wherever of manage a unstructured what So where to, able well strategy. to data platform and govern there's content, for large to process and we're really amount that be are to or of it, That's secure be is well vertical further it, doubling that's and in aligned down

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

This for Naji Jason. on is Sebastien

to could guys them do competition. seems Just that attention vendors be Box push whole with competitive to you data, monetize I'm apply how Aaron, that can that things more Microsoft to of AI. one paying or historically-limited you pressure Google we given that see maybe do to with new respond once a of a the this to over there's their around landscape from it, curious AI me, leadership be just ways data especially run? that? can And bunch more there universe for offering a or with those you their long new FSS really a to increased FSS from the hear competitive think now ECM. Could like impacts you AI How

Yes.

AI. new time, the content definitely get it unstructured under of has content legacy to that out this now So should I threat a the a and a a the more value because to think point as equally in up of in elements to companies the prepared well That see data innovation that's data fragmented means on their of greater solutions, value result are AI-driven unstructured of want And that. are positive. At means clearly drive anybody this key lot there's as same gone architectures world. where going

take customer look automation term and that workflow positive That's applications, in a as I standpoint, the combination come no-code out what for what as the doesn't interfaces can the of map pretty of vendors the that a within the potent in that near road you names think elsewhere done well when Crooze from you base. mentioned. AI combination are becomes at in any again, for terms so us we've market. And exist from that And laid that a just a the of platform-neutral we've

to very that position then we more advanced throw is one of not there, massive the in being a all can that our very training tech by reinforced between the kind benefits game strong being the enable the of because and approach, customers. competitive So of models, that of platform-neutral on feel we out want I'd then on race companies -- only for conversations. And we and training have big actually customer maybe we be one innovation day model every that's about the within our note all there AI delivering

capabilities. when whether make and And you're you decision Box, between about you in of coming By work or a where from don't client Box, all so to AI vendors. content or you your with the the will of move or that those have you it to data or to those of OpenAI best of value Amazon the best IBM, choose don't best different want having have the of Anthropic Microsoft Google of your the get

certainly as neutral position. I be able many content really unique us, scale And not we that think, platforms as the a in to so are we're There's at. are and puts at that very this cloud-based

huge So in AI. advantage for going us we to that's think a be

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

and you're into the a into additions With us highlighting give sales the force you're and how investment this where direct you prioritizing the can channel going and for much sense how efforts? year, the incremental go-to-market of go-to-market is much and sales

Yes.

spend partner But kind And the of generation be demand moderate just So overall that already channels, of the on clip. of demand we investing given in sales which efforts think us, of and the to the making in kind demand, a of including our couple at channel versus Day you the we're field we're going also where you'll ecosystem. And can towards sales we've just and trends that the investments about sales the at like as of for foundation called Analyst about marketing, being the to and majority performing of dollars kind then hear digital that, as will about seeing been going in lot a out overall well increase of growing a in scale of that made, in then kind those the generate details majority towards of the the force scaling Financial especially more programs well you have historically lot and laying can heels of disproportionately we've scaling force. investments think a our marketing very some be optimizations of the strategy go-to-market weeks. some

headwinds incremental internationally? you're give there, Dylan, seeing And more can looking? Japan, It like the you what up sounds bit pipeline maybe you're seeing how on catch with a in us did you color is demand but the that FX

areas that talk about growing those you be when are our generated over well we headwinds that one areas. And those Japan Japan of in we mid-teens as the as the mean past outcomes grew is the indicators. business years, leading I our will this FX the strong. with in the note grew particularly segment X absolutely would over even very past remains based it saw, we where So seeing business that revenue really Japan, -- year. enterprise by on strong Japan

business but of stable channel in kind really fuel around as would and that we that with FX you So say earlier, we're we are have. real could we would is overall think describe think do our reach those about opportunity, what show ecosystem and EMEA. no stable even including help that that but headwinds. And over given an continuing of international there's more investments of that And if not levels seeing in I the growth. ultimately there, to the of the very terms at quite again, about opportunity we talk particular, talked then commensurate certainly strong that broadly, kind especially change those some generate in EMEA I can

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

Wonderful.

one Just from me.

of and back And embedded to put longer-term have Analyst as out from a to any targets, to building one, you numbers revenue then the starting to guidance? year kind of Number run assume your turning some AI whether as AI weeks. Day are build you virtual of direct in terms around you it. what out in this in FY But you actual AI, Just front 'XX upside couple targets? indirect or think about not starting those

Yes.

laying you maybe answer tie we're the the the probably the But So a as second have we'll will sense up continued that. Financial model. of Analyst of view maybe answering also the first on around of kind one our to -- kind question Day how

So we and to into we Plus only upsell the seen able year we this moving into continue have look X/X to from an at, beyond. we have data with about are And Enterprise that to extrapolate but additional of catalyst. trends that have somewhat Box out certainly AI as customers

baking still it's still We to variability, that product. early of conservative an there's in somewhat around also kind want be because

to all we're we isn't because I AI become catalyst that conservative this X it's the expecting kind So Plus would maybe more AI, platform any then in upsells. of a dynamic of I from not sense that of And drive be seeing embedded. outsized would but are it Enterprise say factor particularly the of consumption in of kind think

and this but of sort be to year, that's term. in as we that we about to obviously medium talking platform more some drive, driving be so what And the want dynamics the we'll see we're of consumption upside going that

closing session. Thank to you. That I will turn back concludes over remarks. the for call Cynthia our now question-and-answer

of a on now Thank Tuesday, The hopefully our Day. is to be seeing you, forward to us website, virtual registration you. joining Investor look Thank is and IR Relations March everyone, going on for our number XX. that today. you at We live

conference may This and participation, concludes disconnect. Thank now you for you today's call. your