Slide 1: Third Fiscal Quarter FY24 Financial Results
Third Fiscal Quarter FY24 Financial Results December 5, 2023
Slide 2: Forward-looking statements & non-GAAP financial measures
Forward-looking statements & non-GAAP financial measures This presentation contains forward-looking statements that involve risks, uncertainties, and assumptions, including statements regarding Box’s expectations regarding its growth and profitability, the size of its market opportunity, sales produ
Slide 3: Revenue growth driven by Suites momentum
Revenue growth driven by Suites momentum v e nu e up 5% YoY Re co ns t a nt currency) (up 7% in $261 $262 $256 $252 $250 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Note: $ values are shown in millions. Box fiscal year ends January 31. 3
Slide 4: RPO supports enduring growth and revenue visibility
RPO supports enduring growth and revenue visibility Driven by continued lengthening of contract durations partially offset by FX headwinds Total RPO up 7% YoY (up 8% in constant currency) $1,245 $1,179 $1,138 $1,131 $1,056 $510 Long-Term RPO ($M) $478 $458 $445 $406 $735 $701 Short-Term RPO ($M) $64
Slide 5: Billings and deferred revenue
Billings and deferred revenue Billings down 2%* YoY Deferred revenue up 1%* YoY (down 2% in constant currency) (up 2% in constant currency) $567 $507 $357 $467 $479 $472 $258 $254 $233 $192 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Note: $ values are shown in millions. 5 *Reconcili
Slide 6: Delivering leverage through gross margin expansion
Delivering leverage through gross margin expansion Optimizations from public cloud migration strategy resulted in reduced infrastructure costs offset by 130 bps equipment proceeds headwind Non-GAAP gross margin Down 20 bps YoY 76.5% 76.3%* Q3'23 Q3'24 Note: A reconciliation of non-GAAP operating mar
Slide 7: Delivering significant operating margin improvements
Delivering significant operating margin improvements Operating discipline underpins year-over-year margin expansion Impacted by 130 bps equipment proceeds headwind* Non-GAAP operating margin Up 70 bps YoY 26.0% 24.8% 24.7%* 24.0% 22.8% Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Note: A reconciliation of non-GAAP
Slide 8: Cash, cash equivalents, restricted cash, and short-term investments
Cash, cash equivalents, restricted cash, and short-term investments $ 72 $ 446 $ 440 $ 51 $9 $ 18 Q2'24 CFO Shares CAPEX & Cap Other* Q3'24 Repurchased Lease Payments *“Other” primarily consists of RSU taxes, effects of exchange rate changes on cash, capitalized internal-use software costs and payme
Slide 9: Share repurchase program
Share repurchase program • In Q3, the Company repurchased 1.9 million shares of Box’s Class A common stock for approximately $52 million. • As of October 31, 2023, the Company had approximately $84 million of remaining Board-approved buyback capacity under the current plan. 9
Slide 10: Resilient business model focused on driving growth and profitability
Resilient business model focused on driving growth and profitability FY’21 FY’22 FY’23 Q1’24 Q2’24 Q3’24 Annual Revenue Growth + FCF N/A N/A N/A 26% 33% 37% Margin 6% 6% 5% YoY Revenue Growth 11% 13% 13% 78% 77% 76% Gross Margin 73% 74% 77% 28% 27% 27% S&M as a % of Revenue 30% 28% 28% 18% 17% 17% R
Slide 11: Guidance and Outlook
box Guidance and Outlook
Slide 12: Q4 and fiscal year 2024 guidance
Q4 and fiscal year 2024 guidance Lease FX Equipment Proceeds Modification Excluding Q4FY24 Guidance (12/5/23) Guidance YoY Headwind Headwind* Headwind** adjustments Revenue $262M to $264M +3% ~200 bps - - +5% YoY Gross Margin ~78% -50 bps - 150 bps - ~79.5% GAAP operating margin ~5% -270 bps ~180 bp
Slide 13: Delivering revenue growth at scale
Delivering revenue growth at scale Offset by FX headwinds Q4 FY24 revenue guidance up 3% YoY1 FY24 revenue guidance up 5% YoY1 (Up 5% YoY in constant currency) (Up 8% in constant currency) $1,037-$1,039 $991 $262-$264 $261 $262 $257 $874 $252 $771 $696 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 FY20 FY21 FY22 FY
Slide 14: Key Customer Metrics
box Key Customer Metrics
Slide 15: Net retention rate impacted by a challenging macroeconomic environment
Net retention rate impacted by a challenging macroeconomic environment Stable low full churn rate of 3% offset by lower than expected seat growth Quarterly net retention rate 110% 108% 106% 103% 102% Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 15
Slide 16: Customers increasingly adopting Suites
Customers increasingly adopting Suites Suites support high value use cases and reduce cost and complexity % of total revenue from Suites 51% 47% 48% 46% 42% Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 16
Slide 17: Large customer growth demonstrates strength of business model
Large customer growth demonstrates strength of business model Steady growth in customers paying more than $100k annually 1,740 1,677 1,697 1,646 1,586 +10% YoY Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Customers >$100k in average contract value 17
Slide 18: Strong Suites attach rates
Strong Suites attach rates Attach rates demonstrate platform’s enhanced strategic value Suites attach rate of 79%, up 600 bps 79% 73% 56 53 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Number of new Suites deals >$100k Suites attach rate 18
Slide 19: Appendix
Appendix
Slide 20: Estimated Q4 and fiscal year 2024 preferred share non-GAAP impact summary
Estimated Q4 and fiscal year 2024 preferred share non-GAAP impact summary Q4 FY24 FY24 Amortization of preferred share issuance costs $0.5M $2.1M Preferred stock dividend $3.8M $15.0M Undistributed earnings attributable to preferred $7.0M - $8.0M $27.0M - $28.0M shareholders The preferred stock divi
Slide 21: GAAP Revenue to Billings Reconciliation
GAAP Revenue to Billings Reconciliation ($ in thousands) Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 GAAP revenue $249,951 $256,476 $251,898 $261,428 $261,537 Deferred revenue, end of period 467,080 566,630 507,385 479,293 471,963 Less: Deferred revenue, beginning of period (458,249) (467,080) (566,630) (507
Slide 22: GAAP to Non-GAAP Reconciliation – Gross Margin
GAAP to Non-GAAP Reconciliation – Gross Margin As a % of As a % of As a % of As a % of As a % of ($ in thousands) Q3FY23 revenue Q4FY23 revenue Q1FY24 revenue Q2FY24 revenue Q3FY24 revenue GAAP gross margin $185,461 74.2% $195,462 76.2% $190,247 75.5% $194,415 74.4% $192,310 73.5% Add: Stock-based c
Slide 23: GAAP to Non-GAAP Reconciliation — Operating Expenses
GAAP to Non-GAAP Reconciliation — Operating Expenses As a % of As a % of As a % of As a % of As a % of ($ in thousands) Q3FY23 revenue Q4FY23 revenue Q1FY24 revenue Q2FY24 revenue Q3FY24 revenue GAAP research and development $59,107 24% $60,724 24% $62,518 25% $63,316 24% $61,026 23% Less: Stock-bas
Slide 24: GAAP to Non-GAAP Reconciliation — Operating Expenses
GAAP to Non-GAAP Reconciliation — Operating Expenses As a % of As a % of As a % of ($ in thousands) FY21 revenue FY22 revenue FY23 revenue GAAP research and development $201,262 26% $218,523 25% $243,529 25% Less: Stock-based compensation (61,145) (68,063) (68,900) Less: Restructuring activities - -
Slide 25: GAAP to Non-GAAP Reconciliation — Operating Margin
GAAP to Non-GAAP Reconciliation — Operating Margin As a % of As a % of As a % of As a % of As a % of ($ in thousands) Q3FY23 revenue Q4FY23 revenue Q1FY24 revenue Q2FY24 revenue Q3FY24 revenue GAAP operating margin $13,366 5.3% $19,710 7.7% $8,335 3.3% $9,875 3.8% $11,379 4.4% Add: Stock-based compe
Slide 26: GAAP to Non-GAAP Reconciliation — Free Cash Flow
GAAP to Non-GAAP Reconciliation — Free Cash Flow As a % of As a % of As a % of ($ in thousands) FY21 revenue FY22 revenue FY23 revenue GAAP net cash provided by operating activities $196,834 26% $234,818 27% $297,980 30% Less: Purchases of property and equipment, net of (9,052) (4,702) (4,433) proce
Slide 27: GAAP to Non-GAAP Reconciliation — EPS Outlook
GAAP to Non-GAAP Reconciliation — EPS Outlook Three Months Ended Fiscal Year Ended January 31, 2024 January 31, 2024 GAAP net income per share attributable to common stockholders range, diluted $0.05 - $0.06 $0.15 - $0.16 Stock-based compensation 0.35 1.36 Acquired intangible asset amortization 0.01
Slide 28: GAAP to Non-GAAP Reconciliation — Operating Margin Outlook
GAAP to Non-GAAP Reconciliation — Operating Margin Outlook Three Months Ended Fiscal Year Ended January 31, 2024 January 31, 2024 GAAP operating margin 5.0% 4.0% Add: Stock-based compensation 19.5% 19.5% Add: Acquired intangible assets amortization 0.5% 0.5% Add: Expenses related to litigation 0.5%