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Box(BOX) - 2025 Q3 - Quarterly Report
BOXBox(BOX)2024-12-04 21:05
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Revenue and Growth - Revenue for the three months ended October 31, 2024, was 275.9million,representingayear−over−yeargrowthof5275.9 million, representing a year-over-year growth of 5%[116] - Revenue for the three months ended October 31, 2024, was 275.9 million, a 5% increase from 261.5millioninthesameperiodof2023,drivenbyseatgrowthinexistingcustomersandstrongattachratesofmulti−productSuitesofferings[151]−RevenuefortheninemonthsendedOctober31,2024,was261.5 million in the same period of 2023, driven by seat growth in existing customers and strong attach rates of multi-product Suites offerings[151] - Revenue for the nine months ended October 31, 2024, was 810.6 million, also a 5% increase from 774.9millioninthesameperiodof2023,primarilyduetosimilarfactorsasthequarterlyresults[152]−BillingsforthethreemonthsendedOctober31,2024,were774.9 million in the same period of 2023, primarily due to similar factors as the quarterly results[152] - Billings for the three months ended October 31, 2024, were 264.7 million, representing a 4% increase from 253.7millionintheprioryear[125]ProfitabilityandMargins−GrossprofitforthethreemonthsendedOctober31,2024,was253.7 million in the prior year[125] Profitability and Margins - Gross profit for the three months ended October 31, 2024, was 220.4 million, with a gross margin of 79.9%, compared to 192.3millionand73.5192.3 million and 73.5% for the same period in 2023[116] - Operating income for the three months ended October 31, 2024, was 23.4 million, with an operating margin of 8.5%, up from 11.4millionand4.411.4 million and 4.4% in the prior year[116] - Net income for the three months ended October 31, 2024, was 12.9 million, compared to 10.7millioninthesameperiodof2023,showingapositivetrendinprofitability[149]−Thenetretentionratewas10210.7 million in the same period of 2023, showing a positive trend in profitability[149] - The net retention rate was 102% as of October 31, 2024, consistent with the previous year, indicating stable customer retention despite increased partial customer churn[134] Cash Flow and Investments - Non-GAAP free cash flow for the three months ended October 31, 2024, was 57.4 million, a decrease of 2% from 58.3millioninthesameperiodof2023[131]−Non−GAAPfreecashflowfortheninemonthsendedOctober31,2024,was58.3 million in the same period of 2023[131] - Non-GAAP free cash flow for the nine months ended October 31, 2024, was 213.3 million, an increase of 14% from the same period in 2023[131] - For the nine months ended October 31, 2024, the company generated operating cash flow of 230.1million,comparedto230.1 million, compared to 229.4 million for the same period in 2023[177] - Cash used in investing activities was 5.8million,primarilydueto5.8 million, primarily due to 90.7 million in purchases of short-term investments and 19.0millionincapitalizedsoftwarecosts[180]ExpensesandCostManagement−OperatingexpensesforthethreemonthsendedOctober31,2024,totaled19.0 million in capitalized software costs[180] Expenses and Cost Management - Operating expenses for the three months ended October 31, 2024, totaled 196.9 million, up from 180.9millioninthesameperiodof2023,withincreasesinresearchanddevelopment,salesandmarketing,andgeneralandadministrativeexpenses[149]−Thecostofrevenuedecreasedby180.9 million in the same period of 2023, with increases in research and development, sales and marketing, and general and administrative expenses[149] - The cost of revenue decreased by 13.7 million, or 20%, for the three months ended October 31, 2024, primarily due to a 9.1milliondecreaseindepreciationexpenseanda9.1 million decrease in depreciation expense and a 5.7 million decrease in bandwidth and data center expenses[153] - For the nine months ended October 31, 2024, the cost of revenue decreased by 28.6million,or1428.6 million, or 14%, mainly due to a 22.1 million decrease in depreciation expense and a 14.6milliondecreaseinbandwidthanddatacenterexpenses[156]ResearchandDevelopment−Researchanddevelopmentexpensesincreasedby14.6 million decrease in bandwidth and data center expenses[156] Research and Development - Research and development expenses increased by 6.8 million, or 11%, for the three months ended October 31, 2024, driven by a 20% increase in headcount[158] - For the nine months ended October 31, 2024, research and development expenses increased by 9.1million,or59.1 million, or 5%, also due to a 20% increase in headcount[159] Sales and Marketing - Sales and marketing expenses increased by 7.5 million, or 9%, for the three months ended October 31, 2024, primarily due to a 5% increase in headcount[163] - For the nine months ended October 31, 2024, sales and marketing expenses increased by 20.6million,or820.6 million, or 8%, driven by a 5% increase in headcount[164] General and Administrative Expenses - General and administrative expenses increased by 1.7 million, or 5%, for the three months ended October 31, 2024, due to an 8% increase in headcount[166] - For the nine months ended October 31, 2024, general and administrative expenses increased by 2.5million,or32.5 million, or 3%, primarily due to an 8% increase in headcount[167] Tax Provisions - The provision for income taxes increased by 1.9 million, or 74%, for the three months ended October 31, 2024, mainly due to an increase in foreign non-cash deferred tax expense[173] - For the nine months ended October 31, 2024, the provision for income taxes increased by 6.3million,or886.3 million, or 88%, primarily due to an increase in foreign non-cash deferred tax expense[174] Share Repurchase and Financing - The company repurchased 6.3 million shares at a weighted average price of 27.01 per share for a total of 169.0millionduringtheninemonthsendedOctober31,2024[188]−Thecompanyissued169.0 million during the nine months ended October 31, 2024[188] - The company issued 460.0 million in 1.50% convertible senior notes due September 15, 2029, with a conversion price of approximately 43.46pershare[182]−Thecompanymayseekadditionalequityordebtfinancinginthefuturetosupportgrowthandexpansionefforts[200]CurrencyImpactandHedging−Approximatelyone−thirdofthecompany′srevenueisfromcontractsdenominatedinforeigncurrencies,impactingtotalrevenuebyapproximately220basispointsfortheninemonthsendedOctober31,2024[203][204]−Thecompanyhasenteredintoforeigncurrencyderivativecontractstohedgeaportionofitsnetoutstandingmonetaryassetsandliabilities[206]ProductDevelopmentandCustomerEngagement−TheintroductionofBoxHubsandBoxAIcapabilitiesaimstoenhancecontentmanagementandcollaborationforcustomers[111]−Thecompanyexperiencedincreasedcustomerscrutinyonlargerdealsandlowerseatexpansionratesduetochallengingmacroeconomicconditions[118]−TheincreaseinRPOwasdrivenbyexpansionwithinexistingcustomersandtheadditionofnewcustomers[122]−TheSuitesattachratefordealsover43.46 per share[182] - The company may seek additional equity or debt financing in the future to support growth and expansion efforts[200] Currency Impact and Hedging - Approximately one-third of the company's revenue is from contracts denominated in foreign currencies, impacting total revenue by approximately 220 basis points for the nine months ended October 31, 2024[203][204] - The company has entered into foreign currency derivative contracts to hedge a portion of its net outstanding monetary assets and liabilities[206] Product Development and Customer Engagement - The introduction of Box Hubs and Box AI capabilities aims to enhance content management and collaboration for customers[111] - The company experienced increased customer scrutiny on larger deals and lower seat expansion rates due to challenging macroeconomic conditions[118] - The increase in RPO was driven by expansion within existing customers and the addition of new customers[122] - The Suites attach rate for deals over 100,000 was 83% for the three months ended October 31, 2024, an increase from 79% in the same period of 2023, indicating stronger customer engagement[151]