Box, Inc. · NYSE:BOX
Box — Proxy Contest (August 2021)
67 slides from Box's proxy contest presentation, Aug 13, 2021
Slide 1: Successfully Executing Strategy to Drive Long-Term Value for All Stockholders
box Successfully Executing Strategy to Drive Long-Term Value for All Stockholders
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 the size of its market opportunity, sales productivity, its leadership positi
Slide 3: Table of Contents
Table of Contents Executive Summary ‘An Introduction to Box Successfully Evolving Our Business and Delivering Strong Operational Improvements and Results kKR-Led Investment and Subsequent “Dutch Auction’ Self-Tender in the Best Interest of All Stockholders. Strong, Independent and Qualified Board to
Slide 4: Executive Summary
box Executive Summary
Slide 5: World-Class Board and Leadership Team with the Right Strategy to Drive Value
World-Class Board and Leadership Team with the Right Strategy to Drive Value for Stockholders Successfully Evolving Our Business to Drive Operational Results Accelerating Growth and Driving Margin Improvement Board Has Implemented Significant Board and Governance Changes ‘We've built a stronger foun
Slide 6: World-Class Board and Leadership Team with the Right Strategy (Cont.)
World-Class Board and Leadership Team with the Right Strategy to Drive Value for Stockholders (Cont.) Stockholder Value Through KKR-Led Investment Independent and Qualified Board to Oversee Strategy Vastly Superior Nominees Compared to Starboard’s Slate Starboard is Close- Minded to Alternative Path
Slide 7: An Introduction to Box
box An Introduction to Box
Slide 8: FY21 Revenue and Key Metrics
$771MM FY21 Revenue 100K+ Customers oor Subscription Revenue 67% Fortune 500 Customers $120MM FY21 Free Cash Flow 1,200+ Customers with >$100K in TAV an be found in the Append th
Slide 9: Category-Leading Cloud Content Management Platform
Category-Leading Cloud Content Management Platform FORRESTER’ = IDC Gartner. Catena Contents Peo teeter ge tage aan at es Pate a __| me ere Soe SeTTDSorNsoN yo STO Differentiated Offering Competes Favorably Against Both Legacy and Cloud Vendors "Note: Pemision to use chars nether sought nor obtained
Slide 10: Successfully Evolving Our Business and Delivering Strong Operational Improvements and Results
box Successfully Evolving Our Business and Delivering Strong Operational Improvements and Results
Slide 11: The Box of Today is Not the Box of 2019
The Box of Today is Not the Box of 2019 Box has made extensive changes to its business, Board, governance, and compensation practices since early 2020 * The majority of Starboard’s critiques of Box’s performance relates to periods prior to the March 2020 settlement agreement — Box's Board and manage
Slide 12: Recent Total Stockholder Returns Reflect Support for Our Strategy
While We are Not Satisfied with Our Long-Term Performance, Recent Total Stockholder Returns Reflect Support for Our Strategy Total Stockholder Return — Year to Date (0) Total Stockholder Return - 1-Year (0) 1273172020. Curent ‘6% 8/11/2020 Curent po c) ) Ao% 49% 17% 38% 22% (12%), . Box $225 Peer Se
Slide 13: Box's Recent Track Record of Consistently Beating Market Expectations
Box's Recent Track Record of Consistently Beating Market Expectations Revenue Performance EPS Performance vs. Consensus (%) vs. Consensus (Cents) Quarter In-Quarter owe ide In-Quarter one de Q3 FY20 1.4% Beat 0.4% Beat In-Line In-Line Q4 FY20 1.1% Beat 0.9% Beat $0.03 Beat $0.02 Beat Qi FY21 0.9% Be
Slide 14: Expansion of Valuation Multiple Since the Starboard Settlement
Expansion of Valuation Multiple Since the Starboard Settlement Enterprise Value / NTM Revenue . ‘iple provernent in multip! ~B8% im 2.8x Starboard Settlement (3/24/2020) Post-KKR Transaction Announcement Current (4/9/2021) (8/11/2021) ot ee ped yee nen lento te oy Sing cng Starboard Sterner on March
Slide 15: Analysts Overwhelmingly Agree Our Strategy and Execution are Producing Results
Analysts Overwhelmingly Agree Our Strategy and Execution are Producing Results Strong Strategy and Management has Executing Well, Striking a Healthy Balance ..Leading to a Strong Outlook with Delivered on Objectives... Between Growth and Profitability... Opportunities for Accelerating Growth Sears M
Slide 16: Box is Successfully Evolving its Business
Box is Successfully Evolving its Business Building a stronger foundation across product, customer, and GTM to deliver against stated targets Reaping the Benefits of Investments in Innovation Extending Platform Through Disciplined MBA Greater Adoption and Customer Expansion icant Progress in Improvin
Slide 17: Reaping the Benefits of Investment in Product Innovation
@Reaping the Benefits of Investment in Product Innovation Executing on product roadmap to drive differentiation, adoption, expansion, and lifetime value Box Shuttle Box Sign Box Shield Box Relay Box GxP Validation Box Platform Box Zones Box Governance Box KeySafe l FYOS FY16 FY17 FY18, FY19 FY20 FY2
Slide 18: Shift to Multi-Product Solution Selling is Paying Off
@shift to Multi-Product Solution Selling is Paying Off Consistent improvement in attach rates demonstrates platform's enhanced strategic value Attach Rates for Box Suites (Multi-Product Pricing Plans) for $100K+ Deals “ 70%+ 10% 2 FY20 Q3 FY20 a4 FY20 at Fy21 a2 Fy21 Q3 FY21 4 Fy21 Qi Fy22 Q2 FY22E
Slide 19: Prudent, Strategic M&A to Extend Platform Functionality
@ Prudent, Strategic M&A to Extend Platform Functionality New high-value use cases increase customer engagement and stickiness Disciplined Approach to Tactical M&A Y Accelerate innovation and product roadmap Y Deliver new high-value workflows to customers Y Enhance existing platform capabilities Y A
Slide 20: Strong Customer Economics and Upsell
@Ostrong Customer Economics and Upsell Customers adopting one or more add-on products exhibit ~20 point higher net retention, ~10 point higher gross margin, and ~7X higher average Annual Recurring Revenue than Core-only customers Total Account Value & % of Total 24% 36% } 17% 28% 28% a0 55% 48% 1% F
Slide 21: Accelerating Customer Momentum and Expansion
Ore Accelerating Customer Momentum and Expansion Growth of $100K+ Deals COVID's impact on customer metrics only transitory as strength of underlying execution drives recent results Quarterly Net Retention Rate 107% 106% 106%) 105% 104% 104% 103% 103% TT | [ i l L carv20 a3A20 QtFr20 i ain. ca Fve2e
Slide 22: Increased Efficiency and Productivity in GTM Efforts
@ increased Efficiency and Productivity in GTM Efforts Intense management focus to improve GTM engine resulting in significant S&M leverage S&M Spend as a % of Revenue Sales productivity 54% + Double digit improvement in Enterprise bookings per AE YoY 45% + Increased account executive tenures drives
Slide 23: Continued Strong Gains in Salesforce Productivity
@continued Strong Gains in Salesforce Productivity Board and management have made significant investments to improve productivity and efficiency Average Productivity by Rep by Segments 289% song — Enterprise Commercial Total BBty Fy20 Myevai | finacd Note Gx yearend nay 1 percent improvement based o
Slide 24: Delivering Scaled Growth and Enhanced Profitability
@ Delivering Scaled Growth and Enhanced Profitability Significant progress on our balanced approach to growing the business profitably Quarterly Revenue ($MM) “ TTM Non-GAAP Operating Margin ($MM) 43% ee a ~$214 mM Q2 FYI9 Q2 FY22E ($40) ‘Notes: Box fiscal year ends. January, Q2 FY19 Q2 FY22E Bo CGP
Slide 25: Optimizing Costs to Accelerate Margin Expansion
optimizing Costs to Accelerate Margin Expansion Disciplined efforts across the business to reduce underlying cost structure Non-GAAP Operating Margin (% of Revenue) Workforce Strategy Disciplined in headcount expenses baz] (2%) (11%) 19.5% + Leveraging lower cost regions to drive savings (18%) FYI7F
Slide 26: Business Well Positioned to Support Growth Acceleration
@ Business Well Positioned to Support Growth Acceleration Success in rolling out multi-product strategy and streamlined GTM driving sustainable growth YoY% Quarterly Revenue Growth 13.6% 12.6% Starboard demands 12.1% sale of the company at 11.4% the trough 41.3900 10.6% 10.3% : : i 93 FY20 4 FY20 Qi
Slide 27: Strong Billings and RPO Growth Validate Strategy
Ostrong Billings and RPO Growth Validate Strategy Forward metrics signify increased revenue visibility and growth re-acceleration YoY Billings Growth % “ YoY RPO Growth % ®) ‘Strong RPO increases revenue visibility and confidence in stated financial targets 24.5% 18.6% 13.4% 13.5% 12.8% 11.9% 10.5%
Slide 28: Committed to Exceeding Growth and Profitability Targets
@committed to Exceeding Growth and Profitability Targets Executing a clear and compelling strategy to drive financial results Revenue Growth + Free Cash Flow Margin ‘ 40%+ : ; | ; FY21 P22 FY23 FY24 Guidance HRM Stated Target UN Actual Notes oe yes ua. Free Cash Fw Margin ca Non GAAP financial measu
Slide 29: KKR-Led Investment and Subsequent Dutch Auction Self-Tender
box KKR-Led Investment and Subsequent “Dutch Auction” Self-Tender in the Best Interest of All Stockholders
Slide 30: KKR Investment Brings Significant Strategic Value to Box
KKR Investment Brings Significant Strategic Value to Box KKR investment is about supporting and accelerating Box’s strategy and growth @ _KKR is motivated to see stockholder returns exceed $27 John Park brings valuable experience as a seasoned board member of numerous leading enterprise software and
Slide 31: Positive Analyst Reaction to KKR-Led Investment; Stock Price Increase
Positive Analyst Reaction to KKR-Led Investment; Stock Price Increase Since Announcement Analysts cite 1-day stock price drop driven by removal of M&A speculation $29.00 $27.00 $25.00 preparing board challenge and wants Box to explore potential sale $23.00 $21.00 2021 ement $19.00 Announces KKR¢led
Slide 32: KKR-Led Investment Was Result of Robust Process
KKR-Led Investment Was Result of Robust Process Focused on Maximizing Value for Stockholders We believe the KKR-led investment is a meaningful factor in our stock price performance since the announcement of the transaction Multi-month The 4-member Strategy Committee of our Board - which included all
Slide 33: Investment Provided Stockholder-Friendly Optionality
Investment Provided Stockholder-Friendly Optionality Intensely Negotiated for Benefit of All Stockholders Tender Price Was at Attractive Level vs. Last 2 Years Investment Made on Fair Terms Satisfies Buyback Requested by Stockholders Equitable Treatment for All Stockholders Tender Executed in Pruden
Slide 34: Investment and Repurchases Designed to Be Dilution Neutral
KKR-Led Investment and Subsequent Repurchases Designed to Be Dilution Neutral to Stockholders @ 22x continues to repurchase shares with the proceeds from the KKR-led investment ‘+ Repurchases occurring below preferred conversion price of $27 — 9.25MM shares repurchased at $25.75 per share via tender
Slide 35: Strong, Independent and Qualified Board; Best-in-Class Corporate Governance
box Strong, Independent and Qualified Board to Oversee Strategy Taking Proactive Steps to Enhance Best-in-Class Corporate Governance
Slide 36: Significantly Refreshed and Diverse Board Valuing Stockholder Views
Significantly Refreshed and Diverse Board Valuing Stockholder Views 7of9 B33 40% 3 of 4 Independent Directors Have Year Average / Median Director (Of Our Directors Standing Board Committees “Joined Since 2018 Tenure ‘Are Women Chaired by Women “Dimember Board of John Pare ‘Starboard-approved directo
Slide 37: Highly Qualified Board for SaaS and Enterprise Software Company
Highly Qualified Board for SaaS and Enterprise Software Company Focused on Growth and Profitability pay 600 1 aaa (Class | / 2011) - Former Lead Director (Class | / 2019) P Fomer CFO of Verisign ie I psider CEO and Decor of McAfee Cop 5 Former CEO ord Orc of MC Sate, { t 1 * Former verre Paine at co
Slide 38: Directors Have a History of Supporting Sales of Their Companies
Box's Directors Have a History of Supporting Sales of Their Companies When Doing So Maximizes Stockholder Value volved as board members or ® redrat proofpoint. UNcATee rN ae J? aid astno — IBM rouse & von. okta Qualcomm $353 bition $124billon® $77 bition 87.3tilion $65 billion $38 billion en Heer Or
Slide 39: Commitment to High Standards of Corporate Governance
Commitment to High Standards of Corporate Governance Recent and Ongoing Enhancements ‘Separated Chair / CEO Roles with Independent Chair ( ( ) (Givinatea ‘Supermajority Vote Requirement to Amend the byte) Eliminated Dual Class Structure in 2018 ( Introduced Majority Voting in Uncontested Director El
Slide 40: Compensation Program Promotes Executive Alignment with Stockholder Interests
Compensation Program Promotes Executive Alignment with Stockholder Interests CEO Compensation That is Fully Aligned with All Stockholders With very modest annual compensation relative to peers, Aaron Levie’s reward for performance is almost entirely linked to the appreciation of his ~$100 million st
Slide 41: Board and Compensation Committee Actively Overseeing Compensation Program
Box's Board and Reconstituted Compensation Committee are Actively and Appropriately Overseeing Compensation Program Compensation program will continue to evolve taking into account stockholder feedback Box's Compensa - Box's broad-based equity-focused compensation program encourages employee investm
Slide 42: Board and Compensation Committee Keenly Focused on Burn Rate
Box's Board and Reconstituted Compensation Committee Have Been Keenly Focused on Burn Rate There is a delay between reduced burn rate and reduced reported stock-based compensation expense + Since the beginning of 2020, the Box Board made substantial changes to personnel responsible for overseeing co
Slide 43: Starboard's Demands are Not in the Interest of All Stockholders
box Starboard’s Demands are Not in the Interest of All Stockholders; Election of its Nominees Would be Destructive to Stockholder Value
Slide 44: Box Has Attempted to Work with Starboard Since Their Arrival
Box Has Attempted to Work with Starboard Since Their Arrival * Prior to 2020, Box grew its revenue base but decelerating growth rates and negative operating margins weighed on the performance of the ‘Company and its stock price. Starboard contacted the Company in mid-2019, The Box Board agreed with
Slide 45: Box Has Attempted to Work with Starboard Since Their Arrival (Cont.)
Box Has Attempted to Work with Starboard Since Their Arrival (Cont.) + Inearly 2021, the Board evaluated its strategic altematives as the management team continued to execute the Company's plan to improve the business. The Board formed a Strategy Committee that included Mr. Lazar and Ms. Mayer. © Af
Slide 46: Starboard is Not Aligned with All Stockholders
Starboard is Not Aligned with All Stockholders + Starboard is ignoring consistent progress, has been close-minded to new information and is se Ting Conese plogtess behaving like an investor whose interests are not aligned with other stockholders + Starboard abruptly reversed course and called for a
Slide 47: Box Already Executing Starboard's Newly Disclosed Recommendations
Box Has Already Identified and is Executing Starboard’s Newly Disclosed Recommendations for Operational Improvement The Operating Committee and management team conducted a thorough assessment in the summer of 2020 with the assistance of a top-tier consulting firm Box Initiatives Already Underway Box
Slide 48: Box Already Executing Starboard's Recommendations (Cont.)
Box Has Already Identified and is Executing Starboard’s Newly Disclosed Recommendations for Operational Improvement (Cont.) Box Initiatives Already Underway Y Box’s usage and data volumes have increased at accelerated rates and have driven significant cost improvements to our infrastructure even as
Slide 49: Starboard has Been Close-Minded and is Misrepresenting its Agenda
Starboard has Been Close-Minded and is Misrepresenting its Agenda Only two quarters after Box appointed Starboard’s approved director nominees, Starboard abruptly changed course and its new position was that Box should either explore a sale of the Company or fire the CEO “You guys are on a good path
Slide 50: Starboard is Behaving Like an Investor Whose Interests are Not Aligned
Starboard is Behaving Like an Investor Whose Interests are Not Aligned with Other Stockholders nance A st Market eee Fai 2021 Fq2.2021 FQ3 2021 Fad 2021 Fai 2022 FQ2 20226 Ravens Performances. Consensus-In- BEAT BEAT BEAT BEAT BEAT BEAT Revenue Performance vs. Consensus — Forward Quuarer eure BEAT B
Slide 51: Starboard Consistently Distorts the Facts
Starboard Consistently Distorts the Facts Myth: Starboards Narrative The Facts Starboard claims that they only settled with Box because the existing Board and management team insisted that the Company simply needed a bit more time to prove out its ability to accelerate growth {and improve margins. ‘
Slide 52: Starboard Consistently Distorts the Facts (Cont.)
Starboard Consistently Distorts the Facts (Cont.) Myth: Starboard’s Narrative The Facts Starboard claims they will add back Aaron Levie to the Board in the event that one of their nominees is elected to replace him at the Annual Meeting ‘Starboard has insisted on firing our CEO in the absence of a s
Slide 53: Box's Nominees are Essential and Vastly Superior to Starboard's Slate
Box's Nominees are Essential to Advancing Box's Strategy and are Vastly Superior to Starboard’s Slate Box Nominees Starboard Nominees @& © @ Deborah S. Conrad Peter A. Feld Xavier D. Wiliams Dana van Peterieav Haron Lave ‘SaaS and Enterprise Software Expertise y 4 y Public Company C-Suite Executive
Slide 54: Starboard is Attempting to Replace Our Strong Directors
Starboard is Attempting to Replace Our Strong Directors with Underqualified Candidates Our nominees have an impressive track record of multi-billion-dollar value creation at SaaS- ~ Dict Dana aft inked Pret ner ory epgciare ped cme hi ay this or SuneyWionkey) 4 Sto Drecer of Yewl be NAD tens Ascot C
Slide 55: Starboard Already Has Strong Representation on the Board
Starboard Already Has Strong Representation on the Board and in Board Leadership Positions Starboard representation includes: Chair of the Board, chair of 2/4 standing committees, 2/4 seats on the Operating Committee and 3/4 seats on the Strategy Committee Standing Committee Chairs “=< = Ss cor Bass
Slide 56: Conclusion
box Conclusion
Slide 57: World-Class Board and Leadership Team with the Right Strategy to Drive Value
World-Class Board and Leadership Team with the Right Strategy to Drive Value for Stockholders Successfully Evolving Our Business to Drive Operational Results Accelerating Growth and Driving Margin Improvement Board Has Implemented Significant Board and Governance Changes ‘We've built a stronger foun
Slide 58: World-Class Board and Leadership Team with the Right Strategy (Cont.)
World-Class Board and Leadership Team with the Right Strategy to Drive Value for Stockholders (Cont.) Stockholder Value Through KKR-Led Investment Independent and Qualified Board to Oversee Strategy Vastly Superior Nominees Compared to Starboard’s Slate Starboard is Close- Minded to Alternative Path
Slide 59: Vote FOR ALL of Box's Highly Qualified Director Nominees on the BLUE Proxy Card
x Vote “FOR ALL” of Box’s Highly Qualified Director Nominees on the BLUE Proxy Card Today 59
Slide 60: Appendix
box Appendix
Slide 61: GAAP Revenue to Billings Reconciliation
GAAP Revenue to Billings Reconciliation ($in thousands) Q2FY20 Q3FY20 QAFY20 QuFy21 GAAP revenue $172,549 $177,156 $183,585 $183,561 Deferred revenue, end of period 330,834 325,647 423,849 368,349 Less: Deferred revenue, beginning of period (330,445) (330,834) (325,647) (423,849) Contract assets, be
Slide 62: GAAP to Non-GAAP Reconciliation - Sales & Marketing
GAAP to Non-GAAP Reconciliation —- Sales & Marketing As a % of As a % of As a % of Asa % of (Sin thousands) FY18 revenue _—_—*~FY19._—_—srevenue ~—=sFY20_—_—srevenue —=sFY21._—_—reverue GAAP sales and marketing $303,319 60% $312,210 51% ~=— $317,615 46% ©—«$275,742 36% Less: Stock-based compensation
Slide 63: GAAP to Non-GAAP Reconciliation - Operating Margin
GAAP to Non-GAAP Reconciliation — Operating Margin Asa % of Asa % of As a % of (Sin thousands) Q3FY18* revenue _QAFY18* revenue __QUFY19** _ revenue GAAP operating margin (842,559) (33%) ($32,487) (24%) -—«($35,860) (26%) ‘Add: Stock-based compensation 25,523 20% 24,949 19% 26613 19% ‘Add: Intangibl
Slide 64: GAAP to Non-GAAP Reconciliation - Operating Margin
GAAP to Non-GAAP Reconciliation — Operating Margin As a % of As a % of As a % of Asa % of (Sin thousands) Q2FY20 revenue _—_—Q3FY20__—revenue _—_—QAFY20_—_—srevenue —«QUFY21._—revenue GAAP operating margin ($36,277) (21%) ~—($39,233) (22%) ~—= ($28,581) (15%) ($24,240) (13%) ‘Add: Stock-based compen
Slide 65: GAAP to Non-GAAP Reconciliation - Operating Margin Q2 FY22E
GAAP to Non-GAAP Reconciliation — Operating Margin Q2 FY22E Asa % of (Sin thousands) revenue GAAP operating margin (3%) ‘Add: Stock-based compensation 20% ‘Add: Acquired intangible assets amortization 1% ‘Add: Fees related to shareholder activism 2% Non-GAAP operating margin 20% 6
Slide 66: GAAP to Non-GAAP Reconciliation - Operating Margin
GAAP to Non-GAAP Reconciliation —- Operating Margin Asa % of Asa % of Asa % of As 0% of (Sin thousands) FIT revenue rvs revenue R19 revenue Fv20 revenue ‘GAAP operating margin ($150,655) (38%) ($154,021) (30%) ($134,237) (22%) ($139,472) (20%) ‘Add: Stock-based compensation 78372 19% 97.485, 19% 119
Slide 67: GAAP to Non-GAAP Reconciliation - Free Cash Flow
GAAP to Non-GAAP Reconciliation — Free Cash Flow Asa % of (Sin thousands) Fy21 revenue GAAP net cash (used in) provided by operating activities $196,834 26% Less: Purchases of property and equipment, net of proceeds from (0,082) sales " Less: Principal payments of finance lease liabilities (60,020)