Box, Inc.

Ladies and gentlemen, this is the operator. Today's conference is scheduled to begin momentarily. Until that time, your lines again will be placed on a music hold. Thank you for your patience. 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 Incorporated fourth quarter and fiscal year 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during that time, simply press star followed by the number one on your telephone keypad. And if you'd like to withdraw that question, again, press star 1. Thank you. I would now like to turn the conference over to Cynthia Ponia. Cynthia, you may begin your call.

Good afternoon, and welcome to Box's fourth quarter and full year fiscal 2024 earnings conference call. I'm Cynthia Ponia, Vice President, Investor Relations. On the call today, we have Aaron Levy, Box co-founder and CEO, and Dylan Smith, Box co-founder and CFO. Following our prepared remarks, we will take your questions. Today's call is being webcast and will also be available for replay on our investor relations website at box.com forward slash investors. Our webcast will be audio only, however, supplemental slides are now available for download on our website. We'll also post the highlights of today's call on the X platform at the handle at boxincir. On this call, we will be making forward-looking statements, including our first quarter and full year fiscal 2025 financial guidance, and our expectations regarding our financial performance for fiscal 2025 and future periods, including our free cash flow, gross margins, operating margins, operating leverage, future profitability, net retention rates, remaining performance obligations, revenue and billings, and the impact of foreign currency exchange rates, and our expectations regarding the size of our market opportunity, our planned investments, future product offerings and growth strategies, our ability to achieve our revenue, operating margins, and other operating model targets, the timing and market adoption of and benefits from our new products, pricing models, and partnerships, the proceeds from the sale of our data center equipment, our ability to address enterprise challenges and deliver cost savings for our customers, the impact of the macro environment on our business and operating results, and our capital allocation strategies, including 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 in the documents we filed with the SEC, 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 call. These forward statements are being made as of today, March 5th, 2024, 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 will find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results in our earnings press release, and in related supplemental slides, which can be found on our IR page of our website. Unless otherwise indicated, all reference to financial measures are on a non-GAAP basis. With that, let me turn the call over to Aaron.

Thanks, Cynthia, and thank you all for joining the call today. Our fiscal Q4 results were in line with or above our guidance as we continue to see signs of stabilization in IT budgets in several of our core markets. We achieved revenue of $263 million, up 2% year-over-year, or 4% in constant currency. Operating margins of 26.7% were above our guidance, and EPS of 42 cents was 3 cents above the high end of our guidance. In fiscal 2024, we surpassed a billion in annual revenue, with operating margins of 24.7%, up 160 basis points, from 23.1% a year ago. And despite the macroeconomic pressures on IT budgets, which persisted throughout FY24, we are pleased with our ability to deliver margin expansion, reflecting our execution of the strategies we put in place to lower our cost structure while still investing for long-term durable revenue growth. In FY24, we continued to bring advancements and our category-defining content cloud platform to the market. We launched Box AI in beta, a new suite of capabilities that natively integrate advanced AI models into the Box content cloud. We unveiled Box Hubs, integrated with Box AI, which transforms how companies securely curate and publish content and knowledge across their enterprise. And we also made significant product enhancements in security and compliance, collaboration and workflow, while also further strengthening our ecosystem of partner integrations. As I reflect on the year ahead, it's clear we have an incredibly large opportunity in front of us. At Fox, our mission is to power how the world works together, and the way work happens is changing more than ever before. We know that companies are looking to digitize and automate their businesses by modernizing and simplifying workflows, streamlining collaboration, and connecting their apps together. They are looking to leverage the power of AI to generate new insights, automate their processes, and supercharge productivity. And it's critical that they protect their most important data by detecting and preventing threats, avoiding ransomware, and meeting compliance requirements. At the heart of these trends is how companies work with their most important content, And while unstructured data like contracts, marketing assets, financial documents, and other content represents 90% of all enterprise data, most enterprises continue to be burdened by massive legacy and siloed environments for managing this content. And with the recent acceleration of advances in AI, it's nearly impossible to get the full value of content when it's fragmented across ECM systems, legacy storage infrastructure, and point solutions. For years, Box has enabled powerful ways to securely collaborate and manage enterprise content at scale. But today, we enter a new chapter as a company, and we expect FY25 to represent the most significant set of product expansion and evolution we have had as a company. With the combination of AI, our workflow automation capabilities, and our advanced metadata-driven views, we can fundamentally transform how companies run their most important processes. Just in January, we announced the acquisition of Cruise, a leading provider of no-code enterprise content management applications built on the Box platform. For years, Cruise has leveraged Box's APIs to enable advanced enterprise content management and workflow use cases like contract lifecycle management, digital asset management, and control documents in regulated industries and more. We were thrilled to team up with Cruise, and we will be rapidly integrating and leveraging the company's no-code app builder and metadata capabilities to help customers build out custom interfaces and workflows for working with their most important content. Combined with Box's upcoming workflow automation improvements, including the expected launch of Forms and DocGen this year, Box will be able to power end-to-end critical business processes natively without customers having to do any custom development. And with the acquisition of Cruise, Box will extend into new use cases within our current customers, as well as enabling us to rip and replace legacy ECM solutions. Importantly, these business processes are radically enriched with the power of Box AI. An age-old problem in content management is how companies can apply structure to their unstructured data. For instance, extracting key variables from an invoice or a contract, or labeling critical data inside of a digital asset like an architecture diagram or a product image. With Box AI, we are now able to automatically label and apply metadata on content at scale, doing the work that took humans minutes or hours, performing these tasks now in seconds. for a fraction of the cost. By having AI intelligently process documents and content, you can automate tasks and workflows that would have been cost prohibitive or near impossible to do previously. In FY25, we expect to dramatically advance our Box AI efforts by incorporating new AI models in the Box, building new capabilities to help enterprises customize AI for their business workflow needs, enabling customers to ask questions of content in Box hubs, and leveraging Box AI more extensively throughout our platform APIs. Not only will Box AI continue to be highly differentiated due to our overall security, compliance, and governance on Box, our platform-neutral approach means that we can leverage tens of billions of dollars in R&D happening across tech by integrating with advanced AI models from various AI vendors user experience for Box customers. Consistent with this open approach, today we announced a new integration with Microsoft Azure OpenAI. The expanded collaboration brings Box and Microsoft's enterprise-grade standards for security, privacy, and compliance to AI so customers can realize the benefits of this groundbreaking technology. We also announced that Box AI is generally available to customers on Enterprise Plus plans starting today. Since rolling out Box AI in beta to Enterprise Plus customers in November, we have seen a number of existing customers upgrade to Enterprise Plus to gain access to Box AI. Customer examples in Q4 include a leading construction company, which expanded in Q4 to access Box AI as they were looking to extract the value from their unstructured content in Box, applying metadata at scale, monitoring trends and contracts, managing agreements, and also improving their security posture with metadata-based classification controls. An American multinational technology company upgraded to Enterprise Plus with a six-figure upsell to bring enterprise-grade AI to all of their employees. With access to Box AI powered by the most advanced large language models, this organization can leverage AI for new use cases while keeping their content secure and compliant. Finally, one of the country's leading medical support organizations upgrade to Enterprise Plus to use Box AI to securely curate new content, summarize vast amounts of data, and quickly analyze it to report out to clinics that they support. Now, going beyond AI, this year, to help our customers protect their most important data, our focus remains on building the leading way to protect and govern the full content lifecycle in the enterprise. In the year ahead, we plan to advance our security offerings to deliver improved threat detection and data recovery from ransomware attacks, power more advanced governance workflows, deliver native archiving solutions, achieve FedRAMP high compliance, and deliver deeper integrations with security vendors like CrowdStrike. Next, our flexible and interoperable platform remains a major differentiator for Box. And with our open APIs, we aim to continue to connect with every enterprise app that our customers use, from Microsoft Teams and Slack to Salesforce and ServiceNow and IBM and many more, and help our customers leverage our APIs to power their own applications and workflows. Now, turning to go-to-market, we continue to enable new and existing customers to recognize the full value of the Box platform with increased adoption of our multi-product offerings in Q4. suites represented 81% of deals over $100,000, up from 72% a year ago. We saw continued solid suites attach rates in large deals across all geographies. In Q4, customer expansions and wins with Enterprise Plus included a financial consulting firm who purchased Box with a six-figure Enterprise Plus deal. They will leverage Box as their core enterprise content management platform across the entire firm to enable their business to go fully digital while also eliminating spend on legacy agency management solutions. Next, a top international law firm purchased Box to power how they work internally and with external parties. This organization was looking for a new document management solution that provided security, ease of use, integration support, and regional data storage, which led them to Box. As we look ahead to FY25 and beyond, and as we enter this new chapter as a platform to power intelligent workflows around content, we will leverage our go-to-market motion to bring new solutions to customers, add new pricing models and packages to drive further upsell, and extend our platform to a deeper set of partners and system integrators to deliver our more advanced solutions to customers and drive further growth. We plan to ignite more demand gen and pipeline development programs to reach even more customers and prospects, doubling down in key verticals such as financial services, life sciences, healthcare, and the public sector, honing our focus on key international markets, and more. We are focused on taking advantage of the market opportunity in front of us, and these focused go-to-market investments and initiatives are being made to accelerate the future revenue growth of Boxx. As you can tell, we are incredibly excited about the innovation we will be delivering to our category-defining content cloud platform in FY25. Our robust product roadmap, combined with our investments in strategic go-to-market initiatives, positions us well for the megatrends that are driving IT decisions and for when a more normalized IT spending environment returns. We will be providing more detail on our growth strategy during our upcoming Financial Analyst Day on March 19th. We could not be prouder of how the company continues to execute on the initiatives to drive continued leverage in our cost structure and drive efficiencies across our business while also setting ourselves up to drive accelerated revenue growth. Dylan will be detailing our progress in his comments, but the resiliency of our financial model has been a strategic differentiator for us as we continue to invest in long-term, durable revenue growth. As the way work gets done is changing more than ever, Box is well-positioned to capitalize on these megatrends and power the full lifecycle of content in the enterprise. With that, I'll hand it over to Dylan.