Slide 1: Second Fiscal Quarter FY23 Financial Results
Second Fiscal Quarter FY23 Financial Results August 24, 2022
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: Revenue acceleration driven by large and multi-product deals
Revenue acceleration driven by large and multi-product deals Strong deal pacing offset FX headwinds 15% YoY Revenue up $238 $246 $224 $233 $214 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Note: $ values are shown in millions. Note: Box fiscal year ends January 31.
Slide 4: RPO supports enduring growth and revenue visibility
RPO supports enduring growth and revenue visibility Lengthened contract durations and strategic deals partially offset by FX headwind RPO up 14% YoY $1,071 $1,051 $1,005 $922 $948 $416 $411 $385 Long-Term RPO ($M) $357 $363 $655 $620 $640 $566 $585 Short-Term RPO ($M) Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 N
Slide 5: Billings and deferred revenue
Billings and deferred revenue Billings up 10%* YoY Deferred revenue up 9%* YoY $338 $534 $468 $458 $422 $430 $231 $235 $213 $172 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Note: $ values are shown in millions. *Reconciliations of billings to revenue, deferred revenue, and contract a
Slide 6: Gross margin and operating expense
Gross margin and operating expense* Strong gross margin expansion driving higher profitability Non-GAAP gross margin Non-GAAP operating expense Up 170 bps YoY Increased 100 bps YoY 74.5% 76.2% 28% 28% S&M R&D 17% 18% G&A 9% 9% Q2'22 Q2'23 Q2'22 Q2'23 • Benefit from optimizations to reduce infrastruc
Slide 7: Delivering significant operating margin improvements
Delivering significant operating margin improvements Operating leverage accelerates margin expansion Non-GAAP operating margin 21.7% Y o Y bp s p 110 U 20.8% 20.7% 20.6% 20.6% Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Note: A reconciliation of non-GAAP operating margin to the nearest GAAP financial measures can
Slide 8: Cash, cash equivalents, restricted cash, and short-term investments
Cash, cash equivalents, restricted cash, and short-term investments $28 $520 $118 $394 $8 $28 Q1'23 CFO Shares CAPEX & Cap Other* Q2'23 Repurchased Lease Payments *“Other” primarily consists of RSU taxes, payments of dividend to preferred stockholders and effect of exchange rate changes on cash
Slide 9: Share repurchase program
Share repurchase program • In Q2, the Company repurchased 4.6 million shares of Box’s Class A common stock for approximately $118 million. • As of July 31, 2022, the Company had approximately $29 million of remaining Board-approved buyback capacity under the current plan.
Slide 10: Driving revenue growth and margin expansion while building Cloud Content momentum
Driving revenue growth and margin expansion while building Cloud Content momentum FY’20 FY’21 FY’22 Q1’23 Q2’23 Annual Revenue Growth + FCF Margin 13% 26% 33% N/A N/A YoY Revenue Growth 14% 11% 13% 18% 15% Gross Margin 71% 73% 74% 76% 76% S&M as a % of Revenue 40% 30% 28% 28% 28% R&D as a % of Reven
Slide 11: Guidance and Outlook
box Guidance and Outlook
Slide 12: Q3 and fiscal year 2023 guidance
Q3 and fiscal year 2023 guidance Q3 FY23 Guidance Revenue $250M – $252M GAAP EPS 1¢ – 2¢ Non-GAAP EPS (diluted) 29¢ - 30¢ Weighted-average shares, basic 143 million Weighted-average shares, diluted 151 million GAAP operating margin Approximately 4% Non-GAAP operating margin Approximately 23% Fiscal
Slide 13: Strong revenue growth at scale
Strong revenue growth at scale Driven by customer retention and expansion Q3 FY23 revenue guidance up 13% YoY1 FY23 revenue guidance up 14% YoY1 $992-$996 $238 $246 $250-$252 $874 $224 $233 $214 $771 $696 $608 $506 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 FY18 FY19 FY20 FY21 FY22 FY23 Quarterly Revenue (
Slide 14: Content cloud strategy creates a path to robust long-term growth
Content cloud strategy creates a path to robust long-term growth Committed to delivering multi-year revenue acceleration and operating margin expansion FY20A FY21A FY22A FY231 FY25 (Guidance) Target Revenue Growth + FCF Margin 13% 26% 33% 37% 43-44% Revenue Growth 14% 11% 13% 13-14% 15-17% Gross Mar
Slide 15: Fueling growth and generating operating leverage
Fueling growth and generating operating leverage Committed to consistent “Rule of” expansion over the next 3 years Revenue Growth + Free Cash Flow Margin(1) 43-44%(2) 40-41% 37% 33% 30% 25% 26% FY21 FY22 FY23 FY23 FY24 FY24 FY25 FY25 Stated Target Actuals Notes: (1) Note: Reconciliation to the neare
Slide 16: Key Customer Metrics
box Key Customer Metrics
Slide 17: Re-accelerating customer momentum and expansion
Re-accelerating customer momentum and expansion Strong momentum driving year-over-year growth in net retention rates Quarterly net retention rate 112% +600bps YoY 111% 111% 109% 106% Q2 '22 Q3 '22 Q4 '22 Q1'23 Q2'23 17
Slide 18: Re-accelerating customer momentum and expansion
Re-accelerating customer momentum and expansion Our GTM strategy is producing results 40% 37% 35% 31% 28% 128 % of total revenue from Suites 97 86 74 60 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Number of $100K+ deals
Slide 19: 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 Box Suites deals over $100K up 15% YoY Suites attach rate of 72% 90 80 49% 72% Suites attach rate 73% 70 60 62 50 54 40 +15% YoY 30 29 20 10 0 Q2'22 Q3'22 Q4'
Slide 20: Appendix
Appendix
Slide 21: Q3 and fiscal year 2023 Preferred Share Non-GAAP Impact Summary
Q3 and fiscal year 2023 Preferred Share Non- GAAP Impact Summary Q3 FY23 FY23 Amortization of preferred share issuance costs $0.5M $2.1M Preferred stock dividend $3.8M $15.0M Undistributed earnings attributable to preferred $5.5M - $6.5M $24.5M - $25.5M shareholders As with FY22, the preferred stock
Slide 22: GAAP Revenue to Billings Reconciliation
GAAP Revenue to Billings Reconciliation ($ in thousands) Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23 GAAP revenue $214,486 $224,044 $233,361 $238,432 $246,015 Deferred revenue, end of period 422,039 429,664 534,242 468,350 458,249 Less: Deferred revenue, beginning of period (423,249) (422,039) (429,664) (534
Slide 23: GAAP to Non-GAAP Reconciliation – Gross Margin
GAAP to Non-GAAP Reconciliation – Gross Margin As a % of As a % of As a % of As a % of As a % of ($ in thousands) Q2FY22 revenue Q3FY22 revenue Q4FY22 revenue Q1FY23 revenue Q2FY23 revenue GAAP gross margin $153,698 71.7% $160,975 71.8% $168,681 72.3% $176,223 73.9% $181,172 73.6% Add: Stock-based c
Slide 24: GAAP to Non-GAAP Reconciliation — Operating Expenses
GAAP to Non-GAAP Reconciliation — Operating Expenses As a % of As a % of As a % of As a % of As a % of ($ in thousands) Q2FY22 revenue Q3FY22 revenue Q4FY22 revenue Q1FY23 revenue Q2FY23 revenue GAAP research and development $52,722 25% $55,837 25% $59,105 25% $61,733 26% $61,965 25% Less: Stock-bas
Slide 25: GAAP to Non-GAAP Reconciliation — Operating Expenses
GAAP to Non-GAAP Reconciliation — Operating Expenses As a % of As a % of As a % of ($ in thousands) FY20 revenue FY21 revenue FY22 revenue GAAP research and development $199,750 29% $201,262 26% $218,523 25% Less: Stock-based compensation (62,565) (61,145) (68,063) Less: Restructuring activities (30
Slide 26: GAAP to Non-GAAP Reconciliation — Operating Margin
GAAP to Non-GAAP Reconciliation — Operating Margin As a % of As a % of As a % of As a % of As a % of ($ in thousands) Q2FY22 revenue Q3FY22 revenue Q4FY22 revenue Q1FY23 revenue Q2FY23 revenue GAAP operating margin ($6,110) (2.8%) ($11,087) (4.9%) ($166) (0.1%) $624 0.3% $3,140 1.3% Add: Stock-based
Slide 27: GAAP to Non-GAAP Reconciliation — Free Cash Flow
GAAP to Non-GAAP Reconciliation — Free Cash Flow As a % of As a % of As a % of ($ in thousands) FY20 revenue FY21 revenue FY22 revenue GAAP net cash provided by operating activities $44,713 6% $196,834 26% $234,818 27% Less: Purchases of property and equipment, net of (5,444) (9,052) (4,702) proceed
Slide 28: GAAP to Non-GAAP Reconciliation — EPS Outlook
GAAP to Non-GAAP Reconciliation — EPS Outlook Three Months Ended Fiscal Year Ended October 31, 2022 January 31, 2023 GAAP net income (loss) per share attributable to common stockholders range, basic and diluted $0.01 – $0.02 ($0.03) - $0.00 Stock-based compensation 0.32 1.31 Acquired intangible asse
Slide 29: GAAP to Non-GAAP Reconciliation — Operating Margin Outlook
GAAP to Non-GAAP Reconciliation — Operating Margin Outlook Three Months Ended Fiscal Year Ended October 31, 2022 January 31, 2023 GAAP operating margin 4.0% 3.0% Add: Stock-based compensation 18.5% 19.0% Add: Acquired intangible assets amortization 0.5% 0.5% Non-GAAP operating margin 23.0% 22.5%