Box, Inc.

good day and thank you for standing by and welcome to the box inc second quarter fiscal 2022 earnings conference call at this time all participants are in a listen only mode after the speaker's remarks there will be a question and answer session to ask a question during a session you will need to press star 1 on your telephone please be advised that today's conference is being recorded if you require any further assistance please press star 0. i would now like to hand a conference over to your speaker today Cynthia Hiponia, please go ahead.

Good afternoon and welcome to Box second quarter fiscal 2022 earnings conference call. I'm Cynthia Hiponia, Vice President, Investor Relations. On the call today, we have Aaron Levy, our CEO, and Dylan Smith, our CFO. Following our prepared remarks, we will take your questions. Today's call is being webcast and will be available for replay on our Investorations website at box.com forward slash investors. Our webcast will be audio only. However, supplemental slides are now available for download from our website. We also post the highlights of today's call on Twitter at the handle at boxincir. On this call, we'll be making forward-looking statements, including our Q3 and fiscal year 22 financial guidance and our expectations regarding our financial performance for fiscal 2022 and future periods, including our free cash flow, gross margins, operating margins, operating leverage, future profitability, unrecognized revenue, remaining performance obligations and billing, and our expectations regarding the size of our market opportunity, our planned investments and growth strategies, our ability to achieve our long-term revenue and other operating model targets, the timing and market adoption of and benefits from our new products, pricing, and partnerships, the impact of our acquisitions on future Box product offerings, the impact of the COVID-19 pandemic on our business and operating results, the KKR-led investment in Box, and any potential repurchase of our common stock. These statements reflect our best judgment based on factors currently known to us and actual events or results may differ materially. Please refer to our earnings press release filed today and the risk factors and documents we filed with Securities and Exchange Commission, including our most recent quarterly report on Form 10-Q for information on risks and uncertainties that may cause actual results to differ materially from statements made on this earnings column. These forward-looking statements are being made as of today, August 25, 2021, and we disclaim any obligation to update or revise them should they change or cease to be up to date. In addition, during today's call, we will discuss non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from our GAAP results. You can find disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results, in our earnings press release and in our related PowerPoint presentation, which can be found on the investor relations page of our website. Unless otherwise indicated, all reference to financial measures are on a non-GAAP basis. Lastly, while we recognize there's been news around our upcoming annual meeting on September 9th, the purpose of today's call is to discuss our financial results. We ask that during the Q&A portion of this call you keep your questions focused on our performance. With that, let me hand the call over to Erin.

Thanks, Cynthia, and thank you all for joining the call today. We achieved strong second quarter results across all metrics, marking our fifth consecutive quarter of achieving both revenue and non-GAAP EPS above our guidance. We delivered second quarter revenue growth of 12% year over year, a second consecutive quarter of accelerating revenue growth, billings growth of 13%, and RPO growth of 27%. From our business performance and building momentum, it's clear that enterprises are increasingly making strategic, long-term decisions on how to support a remote workforce and digital processes while still maintaining a high level of security and compliance policies. As a result, more customers are turning to the Box Content Cloud to deliver secure content management and collaboration built for this new way of working. our strong momentum is best illustrated by our customer deal metrics in the second quarter. Our net retention rate was 106%, up from 103% in the prior quarter. We had 74 new deals over $100,000, up 16% year over year. and we had a 73% attach rate of sweep on deals over $100,000 in the quarter, up from 49% in the prior quarter and up from 31% in Q2 fiscal 21. We view these strong customer metrics as evidence that we are executing on the right product strategy, one that is well aligned with the three major changes happening around the future of work in the enterprise. First, Hybrid work is going to be a necessity going forward. Second, digital transformation is driving significant change across all industries. And third, cybersecurity and privacy threats are increasing at a growing rate, as we've seen with recent ransomware attacks. These trends have major implications for how companies work with their content. Content is at the heart of how leading life sciences firms discover, develop, and deliver new drugs and treatments. how banks collaborate with and onboard new clients or close deals, and how consumer product organizations ideate on, manufacture, and scale new products. Whether it's a CAD design, a sales presentation, marketing asset, research study, legal contract, or financial data, content is our customer's business. Today, enterprises have to purchase and integrate a mix of solutions from disparate vendors to solve the entire content management lifecycle. This leads to broken processes for users, security risks due to the gaps between tools, fragmented data, and increased costs for enterprise customers. Our vision for the Box Content Cloud is to integrate and power the complete content lifecycle from the moment content is created through the entire content workflow. By leveraging our product leadership and content management, our content cloud will continue to extend into key elements of this lifecycle, including e-signature, content publishing, deeper content workflows, new collaboration experiences, analytics, data privacy, and advanced security. Critical to our success is our ability to execute on our product roadmap, which expands our total addressable market and adds value to our core platform with new product innovation. This is why we were pleased to deliver on our product roadmap with the launch of FoxSign to select customers in late July, capitalizing on the trend of more transactions moving from paper-based manual workflows to the cloud, while also addressing an incremental multi-billion dollar market. BoxSign was developed through the acquisition of SignRequest, a leading cloud-based electronic signature company, and a good example of our disciplined approach to M&A. Our decision to acquire this particular technology versus developing internally was driven by time to market, with e-signature being the number one requested feature from customers last year. Initial response from customers has been very positive, and we are rolling out BoxSign to all business and enterprise customers throughout this fall, with a significant roadmap of innovation ahead. Also, over the quarter, we made meaningful updates to our governance functionality to help support customers' legal hold and document retention needs, as well as new features within BoxShield to protect the flow of content with advanced machine learning-based security features. Our security, compliance, data governance, and privacy capabilities remain one of the most critical reasons customers choose the Box Content Cloud, and our innovation here is only accelerating. In addition to these and many other product updates in the quarter, we continue to integrate deeply across the SaaS landscape. A key part of our Content Cloud value proposition is interoperability and strong partnerships with leading technology companies. This is critical to our success at scale. building on the great work we've done with so many amazing partners, including Slack and Microsoft. In the second quarter, we announced a new integration with ServiceNow's legal service delivery application to modernize legal operations, which benefits customers by bringing together ServiceNow's advanced workflow expertise to minimize manual processing while ensuring confidential legal content is secured on Box's content cloud. And we also announced new and deepened integrations with box for Cisco WebEx to make it easier for customers to work securely and effectively in the cloud. And we're just getting started to address our $50 billion plus market opportunity. We are building the end to end platform for managing the life cycle of content and continue to be regarded by customers and analysts as the leading independent vendor for cloud content management. Of course, Evolving our product strategy to meet today's enterprise remote and hybrid workforce needs and strengthening our partnerships with leading technology companies are only part of our strategy to drive growth. We have also been methodically enhancing our land and expand go-to-market model to deliver our full platform to our customers. To accelerate growth, over the past couple of years, we've been actively implementing a number of strategic go-to-market initiatives, including optimizing pricing and packaging, improving sales segmentation and territory planning, driving efficient marketing programs and pipeline generation, increasing sales enablement and doubling down our focus on key verticals, such as life sciences and financial services and the federal government. And the success of our go-to-market initiatives and the growing demand for our more advanced capabilities drove our strong suites adoption in the second quarter. This is why we've been working aggressively to sell the full box platform through our suites offering to bring all the box has to offer to our customers. We know that when a customer adopts our multi-product offerings, we see greater total account value, higher net retention, higher gross margin, and a more efficient sales process. Building on the success of Suites, in late July, we also announced a new, simplified product edition for our enterprise customers called Enterprise Plus, which includes Shield, Governance, Relay, Platform, Box Sign, the ability for large file uploads, and enhanced support and consulting credits. You can see the success of our go-to-market efforts most clearly when looking at our Q2 customer expansion. For instance, One of the largest banks in the world purchased a seven-figure deal with multiple products, including KeySafe, Governance, Relay, Shield, and Platform to support new use cases for Box, including claims processing and loan origination in a more secure virtual environment. The bank has also standardized on Box for internal and external collaboration. An innovative biopharmaceutical company did a six-figure expansion with Box to support its growing workforce following multiple acquisitions to help power its mission to transform the way that drugs are manufactured in the U.S. With Box, the company's workforce is able to improve collaboration, security, and GFP compliance, providing them with a scalable and secure foundation that allows them to work faster. And finally, a global leader in energy services that has been a Box customer since 2017 expanded its use of Box with a six-figure ELA and the purchase of Enterprise Plus. This will enable them to have a proactive approach to internal threat detection on content, be more prescriptive with security controls around content, and automate more than a dozen critical business workflows. These deals showcase the simplicity and power of our business model. We are focused on expanding our customers through additional seed growth by going wider within organizations, as well as adding more value through additional feature enhancements and new products that drive up customer value and retention. Over the past year, we have been executing on our strategy to re-accelerate growth, while also driving continued operating margin improvements. And our results in the second quarter demonstrate that our strategy is working. As a result, we have raised our guidance for the full fiscal year 2022 and are reiterating our long-term targets of 12% to 16% revenue growth and 23% to 27% non-GAAP operating margin in FY24. Our strong second quarter results and our confidence in our outlook for this fiscal year and beyond are the direct result of the leadership of our board and the hard work and execution we've been driving as a company. I could not be prouder of the team at Box. And while we still have so much we want to accomplish, I am confident that we have the right team and leadership to execute on our strategy and targets going forward, as well as a world-class board of directors that is focused on and committed to driving enhanced value for shareholders. With that, I'll turn it over to Dylan.