Financial Data and Key Metrics Changes - In Q3, the company reported revenue of $301 million, representing a 9% year-over-year growth, exceeding guidance [21][22] - Operating margin was 28.6%, with gross margin at 81.7%, both metrics surpassing expectations [23][24] - Net retention rate improved to 104%, up from 103% in Q2 and 102% year-over-year, driven by strong demand for Box AI [23][29] Business Line Data and Key Metrics Changes - Billings grew by 12% year-over-year to $296 million, exceeding guidance of approximately 10% [22][23] - Remaining performance obligations (RPO) reached $1.5 billion, growing 18% year-over-year, indicating strong customer demand [22][23] Market Data and Key Metrics Changes - The company noted that approximately one-third of revenue is generated outside the U.S., with 65% of international revenue coming from Japan [25] - The company is experiencing strong momentum in the federal sector, particularly after receiving FedRAMP High authorization [43] Company Strategy and Development Direction - The company is focusing on driving adoption of its AI-powered solutions, particularly through the Enterprise Advanced platform [16][29] - Strategic partnerships with major firms like AWS and Tata Consultancy Services are aimed at enhancing AI capabilities and expanding market reach [14][18] - The company is committed to becoming a leading AI-first organization, leveraging AI agents to improve productivity and customer service [20][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for Box AI and the potential for continued growth in net retention rates and seat expansions [46][60] - The company anticipates Q4 revenue to be approximately $304 million, with full-year revenue expected to reach $1.175 billion, reflecting an 8% year-over-year growth [26][27] Other Important Information - The company repurchased 2.4 million shares for approximately $77 million in Q3, with an additional $150 million authorized for share repurchase [24][25] - The company plans to settle $205 million of convertible notes due in January 2026 with cash [25] Q&A Session Summary Question: Insights on growth levers since March Analyst Day - Management indicated that growth levers are tracking well, with strong adoption of Enterprise Advanced and AI capabilities exceeding expectations [32][34] Question: Drivers of sales and marketing efficiency - Management noted improvements in sales productivity and emphasized ongoing investments in sales capacity and partnerships [37][39] Question: Update on FedRAMP High and federal vertical performance - Management confirmed positive momentum in federal sales, despite some deal timing shifts due to the government shutdown [42][43] Question: Impact of macro recovery on seat growth - Management acknowledged a macroeconomic element but emphasized that seat expansions are primarily driven by new use cases enabled by AI capabilities [44][46] Question: Competitive landscape and AI's impact on content management - Management highlighted that AI is expanding the content management market and driving migrations from legacy systems to Box [49][55] Question: Insights on Enterprise Advanced and seat growth - Management noted continued strength in both pricing and seat growth, indicating significant upside potential for net retention rates [59][60] Question: Go-to-market investment priorities - Management outlined a focus on verticalization, partner ecosystems, and scaling high ROI marketing programs as key investment areas [75][76]

Financial Data and Key Metrics Changes - In Q3, the company reported revenue of $301 million, representing a 9% year-over-year growth, exceeding guidance [21][22] - Operating margin was 28.6%, surpassing guidance, with gross margin at 81.7%, also exceeding expectations [23][24] - Net retention rate improved to 104%, up from 103% in Q2 and 102% year-over-year, driven by strong demand for Box AI and Enterprise Advanced [23][24] Business Line Data and Key Metrics Changes - Billings grew by 12% year-over-year to $296 million, exceeding guidance of approximately 10% [22][23] - Remaining performance obligations (RPO) reached $1.5 billion, growing 18% year-over-year, indicating strong customer demand for Box AI [22][23] Market Data and Key Metrics Changes - The company noted that approximately one-third of revenue is generated outside the U.S., with 65% of international revenue coming from Japan [25] - The strengthening of the U.S. dollar against the yen is expected to impact future revenue guidance [25] Company Strategy and Development Direction - The company is focused on driving adoption of its AI-powered solutions, particularly through the Enterprise Advanced platform [16][17] - Strategic partnerships, such as with AWS and Tata Consultancy Services, are aimed at enhancing AI capabilities and expanding market reach [14][18] - The company is positioning itself as a trusted platform for unstructured data with built-in AI governance and security [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for Box AI and the potential for continued growth in net retention rates and seat expansion [46][60] - The company anticipates delivering strong results in Q4, with revenue expected to be approximately $304 million, representing 9% year-over-year growth [25][26] Other Important Information - The company repurchased 2.4 million shares for approximately $77 million in Q3, with an additional $150 million authorized for share repurchase [24] - The company plans to settle $205 million of convertible notes due in January 2026 with cash [24][25] Q&A Session Summary Question: Growth levers since March Analyst Day - Management indicated that all growth levers are tracking well, with strong adoption of Enterprise Advanced and AI capabilities exceeding expectations [32][34] Question: Sales and marketing efficiency - Management noted improvements in sales and marketing efficiency, attributing it to investments in sales capacity and partnerships [37][39] Question: Federal vertical performance and pipeline - The company is seeing good momentum in the federal vertical, with FedRAMP High authorization enabling more complex government deals [42][43] Question: Seat growth dynamics - Management stated that seat growth is primarily driven by AI-enabled workflows rather than macroeconomic recovery [44][46] Question: Competitive landscape and AI impact - Management highlighted that AI is driving new use cases and increasing interest in migrating from legacy systems to Box [49][51] Question: Impact of Enterprise Advanced on pricing and seat growth - Management confirmed that both pricing and seat growth are contributing positively to net retention rate improvements [59][60] Question: Go-to-market investment priorities - Management emphasized the importance of investing in the partner ecosystem and verticalization of the sales force to drive growth [75][76]

Financial Data and Key Metrics Changes - In Q3, the company reported revenue of $301 million, representing a 9% year-over-year growth, exceeding guidance [21][22] - Operating margin was 28.6%, surpassing guidance, with gross margin at 81.7%, also exceeding expectations [23][24] - Net retention rate improved to 104%, up from 103% in Q2 and 102% in the previous year [23][24] Business Line Data and Key Metrics Changes - Billings grew by 12% year-over-year, driven by strong bookings, exceeding the guidance of approximately 10% [22][23] - Remaining performance obligations (RPO) reached $1.5 billion, growing 18% year-over-year, indicating strong customer demand for Box AI [22][23] Market Data and Key Metrics Changes - The company noted that Suite customers now account for 64% of revenue, up from 59% a year ago, indicating a shift towards higher-value offerings [22] - The company is seeing strong momentum in partner-led business, delivering double-digit revenue growth in partner-led wins in Q3 [17] Company Strategy and Development Direction - The company is focused on driving adoption of its AI-powered solutions, particularly through the Enterprise Advanced platform, which is seeing strong upgrades and new customer acquisitions [10][16] - Strategic partnerships, such as with AWS and Tata Consultancy Services, are aimed at enhancing AI capabilities and expanding market reach [14][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for Box AI and the Enterprise Advanced platform, expecting continued growth in net retention rates and seat expansions [23][36] - The company anticipates Q4 revenue to be approximately $304 million, representing about 9% year-over-year growth, and expects FY26 revenue to be around $1.175 billion [25][27] Other Important Information - The company repurchased 2.4 million shares for approximately $77 million in Q3, with a remaining buyback capacity of $35 million [24] - The company plans to settle $205 million of convertible notes due in January 2026 with cash [24] Q&A Session Summary Question: Growth levers since March Analyst Day - Management indicated that all growth levers are tracking well, with strong adoption of Enterprise Advanced and AI capabilities exceeding expectations [29] Question: Sales and marketing efficiency - Management noted improvements in sales and marketing efficiency, attributing it to investments in sales capacity and partnerships [30][31] Question: Federal vertical performance - The company is seeing good momentum in the federal vertical, aided by FedRAMP High authorization, despite some deal timing shifts due to the government shutdown [34] Question: Seat growth dynamics - Management stated that seat growth is primarily driven by AI-enabled workflows rather than macroeconomic recovery [35] Question: Competitive landscape with AI - Management highlighted that AI is catalyzing new use cases and increasing interest in migrating from legacy systems to Box [39][42] Question: Impact of Enterprise Advanced on pricing and seat growth - Management confirmed that both pricing and seat growth are contributing positively to net retention rates, with significant upside potential [43] Question: Path towards acceleration into next year - Management expressed confidence in returning to double-digit top-line growth, supported by strong underlying momentum [45]

AI & Unstructured Data Management - Box is focused on helping companies manage their unstructured data, which accounts for approximately 90% of enterprise data, including financial documents, contracts, and research materials [2] - The company is introducing new capabilities with agents to enable users to tap into unstructured data and automate workflows [3] - Box is launching a new workflow automation capability called Box Automate, allowing users to design end-to-end business processes and integrate agents at various steps [3] - These capabilities can be applied to various industries, such as client onboarding in banking, contract review in law firms, and healthcare data management [4] Competitive Advantage & Market Position - Box's approach of integrating AI into existing data and security infrastructure leads to higher success rates compared to companies building their own AI technology [6][7] - The company emphasizes adapting to the changing software landscape and continuously innovating to maintain its market position [11][12][13] Revenue & Growth Strategy - Box introduced a new plan called Enterprise Advanced, which includes advanced AI capabilities and workflow automation, driving revenue growth [9] - The Enterprise Advanced plan is designed to facilitate customer upgrades and seamless adoption of advanced capabilities [9] - The company's recent financial performance, exceeding guidance and consensus, is attributed to the momentum of Enterprise Advanced [10] - Box is a $1 billion revenue per year company [8]

Core Insights - The company is focused on helping organizations manage unstructured data, which constitutes approximately 90% of enterprise data, including financial documents, contracts, and research materials [2][3] - A new workflow automation capability called Box Automate has been announced, allowing businesses to design end-to-end processes and integrate agents for automation in unstructured workflows [3][4] - The introduction of the Enterprise Advanced plan includes advanced AI capabilities and workflow features, which is expected to drive revenue growth and improve customer engagement [9][10] Industry Trends - There is a notable difference in success rates for companies that collaborate with software vendors versus those that attempt to build their own technology, with the former showing higher success [6][7] - The MIT report highlighted varying success and failure rates in AI implementations, suggesting that CIOs should consider these insights when deploying AI solutions [5][7] - The competitive landscape in the software industry is shifting, with companies needing to adapt quickly to maintain their positions, as emphasized by the historical context of disruption in the tech sector [11][13]

Group 1 - Box has been public for almost 10 years and is experiencing excitement around its newer AI capabilities resonating with customers [2][3] - The recent quarter showed strong financial results driven by the adoption of Enterprise Plus and the newly launched Enterprise Advanced plan [3] - Initial adoption of the new plans has contributed to outperformance in various top line metrics, indicating positive customer reception and future growth potential [3]

Financial Data and Key Metrics Changes - The company reported strong financial results driven by the adoption of new AI capabilities, which positively impacted various top-line metrics [4][28] - The net retention rate increased by one point quarter on quarter, achieving year-end targets earlier than expected [28] Business Line Data and Key Metrics Changes - The Enterprise Advanced plan launched in January has shown early momentum, contributing to improved price per seat and overall growth [28] - The company is seeing a significant increase in use cases, particularly in loan origination and document processing, which are driving customer satisfaction and operational efficiency [56][61] Market Data and Key Metrics Changes - The macroeconomic environment is described as relatively stable, with customers continuing to make purchasing decisions despite a cautious outlook [7][8] - There is a noted shift in customer engagement, with many moving from skepticism to actively trying and implementing AI solutions [53] Company Strategy and Development Direction - The company is positioning itself as an AI-first organization, focusing on integrating AI capabilities into its product offerings to enhance customer value [32][33] - The introduction of the MCP protocol is expected to facilitate better integration across platforms, allowing for more sophisticated and rapid deployments [35][36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting the importance of AI in driving new use cases and customer engagement [28][62] - The company is focused on leveraging AI to improve operational efficiencies and accelerate product development [50][51] Other Important Information - The company is committed to making AI certification mandatory for all employees to ensure a deep understanding of AI capabilities [47] - The upcoming BoxWorks conference is anticipated to showcase new features and capabilities related to the Enterprise Advanced plan [42] Q&A Session Summary Question: How is the AI revenue base evolving? - The company does not specifically track AI revenue as it considers itself an AI-first company, integrating AI capabilities across all plans [27] Question: What is driving seat growth? - Seat growth is primarily driven by expanding use cases and stabilizing churn rates, with a focus on adding back users rather than just stabilizing losses [30] Question: How does the company view the competitive landscape? - The company believes its focus on secure, compliant, and high-accuracy AI applications for unstructured data gives it a competitive edge [62] Question: What is the role of the new CRO? - The new CRO is expected to scale existing strategies and enhance customer engagement, leveraging his experience with enterprise customers [66] Question: How does the company plan to work with partners? - The company sees a significant opportunity to collaborate with partners, particularly in the context of AI, to help clients transform their content management practices [68]

Financial Data and Key Metrics Changes - The company reported Q2 revenue of $294 million, exceeding guidance and reflecting a 9% year-over-year growth, or 7% in constant currency [28] - Remaining performance obligations (RPO) grew 16% year-over-year to $1.5 billion, with short-term RPO increasing by 12% [29] - Q2 billings were $265 million, up 3% year-over-year, driven by strong bookings and early renewals [30] - The net retention rate improved to 103%, up from 102% in the previous quarter [31] - Gross margin for Q2 was 81.4%, reflecting a 40 basis point year-over-year increase [31] Business Line Data and Key Metrics Changes - The Enterprise Advanced plan saw significant customer adoption, contributing to revenue growth and customer upgrades [8][10] - Suites customers accounted for 63% of total revenue, up from 58% a year ago, driven by the adoption of Box.ai and Enterprise Advanced [29] - The company experienced strong momentum in Enterprise Plus, which also contributed to revenue growth [10] Market Data and Key Metrics Changes - Approximately one-third of revenue is generated outside the U.S., with 65% of international revenue coming from Japan [34] - The company noted a favorable foreign exchange impact on revenue and billings growth [35][38] Company Strategy and Development Direction - The company is focusing on driving the adoption of Enterprise Advanced and enhancing its AI capabilities to transform enterprise workflows [20][24] - Plans for the second half of the year include new workflow and no-code app capabilities, enhancing productivity through AI integration [18][19] - The company aims to maintain a strong security posture as it expands its AI capabilities, ensuring customer trust [19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing demand for AI capabilities and the potential for significant growth in enterprise content management [27][39] - The company is committed to a disciplined capital allocation strategy while continuing to invest in its AI-driven platform [27] Other Important Information - The current Chief Revenue Officer announced retirement, with Jeff Newsome appointed as the new CRO [22][24] - The company plans to showcase new product announcements at the upcoming BoxWorks conference [90] Q&A Session Summary Question: What drove the outperformance in Enterprise Advanced? - Management indicated that the outperformance was influenced by strong bookings, early renewals, and the demand for AI capabilities across the business [41][42] Question: How is the pipeline expanding with Enterprise Advanced? - The company noted that the use cases for Enterprise Advanced are broadening, leading to larger deal sizes and more complex workflows [42][43] Question: What is driving the net seat growth? - The increase in net seat growth is attributed to the relevance of Enterprise Advanced to more users and departments [47][48] Question: How much of the Q2 outperformance was due to early renewals? - Management stated that early renewals contributed to the outperformance, but all factors had a similar impact [51][53] Question: What are the next steps for customers comfortable with metadata extraction? - The company plans to automate workflows tied to extracted data, enhancing the overall value of unstructured data [60][62] Question: What is the vision for the MCP server? - The MCP server aims to centralize access to unstructured data across various AI systems, enhancing security and efficiency [66][68]

Financial Data and Key Metrics Changes - The company reported Q2 revenue of $294 million, reflecting a 9% year-over-year growth and a 7% increase in constant currency [26] - Remaining performance obligations (RPO) grew by 16% year-over-year, reaching $1.5 billion [27] - Q2 operating margin was 28.6%, with earnings per share (EPS) of $0.33, exceeding guidance [30] Business Line Data and Key Metrics Changes - Customer adoption of Enterprise Advanced significantly increased, contributing to strong revenue growth [6] - Suites customers now account for 63% of total revenue, up from 58% a year ago, driven by the adoption of Box.ai and Enterprise Advanced [27] - The company experienced a net retention rate of 103%, an improvement from 102% in the previous quarter [28] Market Data and Key Metrics Changes - Approximately one-third of revenue is generated outside the U.S., with 65% of international revenue coming from Japan [32] - Q2 billings were $265 million, up 3% year-over-year, exceeding expectations despite foreign exchange headwinds [28] Company Strategy and Development Direction - The company is focusing on driving the adoption of Enterprise Advanced and enhancing AI capabilities to transform enterprise workflows [18][21] - Plans to introduce new workflow and no-code app capabilities to automate critical workflows around content [16] - The company aims to maintain a strong security posture to protect sensitive enterprise data as AI capabilities expand [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the momentum in AI adoption and its impact on business growth [25] - The company is committed to a disciplined capital allocation strategy while investing in key initiatives to drive growth [25] - Management acknowledged the challenges in the macroeconomic environment but remains focused on long-term growth opportunities [54] Other Important Information - The company announced the retirement of its current Chief Revenue Officer, with Jeff Newsome appointed as the new CRO [20] - The upcoming BoxWorks conference is expected to showcase significant product launches and updates [23] Q&A Session Summary Question: What drove the outperformance in billings? - Management indicated that the outperformance was influenced by strong bookings, early renewals, and the demand for AI capabilities in Enterprise Advanced [40][41] Question: How is the pipeline expanding with Enterprise Advanced? - The company noted that the use cases for Enterprise Advanced are broadening, leading to larger deal sizes and more complex workflows [42][44] Question: What is driving net seat growth? - The increase in net seat growth is attributed to the relevance of Enterprise Advanced to more users across customer organizations [47] Question: How common are upgrades to Enterprise Advanced? - Upgrades to Enterprise Advanced are occurring more frequently than expected, with significant pricing uplifts observed [49] Question: How does early renewal impact Q2 performance? - Early renewals contributed to the strong performance, with similar impacts from various factors driving overall outperformance [52][54] Question: What are the next steps for customers using metadata extraction? - Customers are expected to automate workflows tied to extracted data, enhancing operational efficiency [60][64] Question: What is the vision for the MCP server? - The MCP server aims to serve as a central repository for unstructured data, allowing seamless access across various AI systems [66][70]

Core Viewpoint - MongoDB is positioned as a leading choice for non-relational data projects, becoming an industry standard for developers needing flexible data storage solutions [1][2]. Group 1: Business Model and Revenue Sources - MongoDB's business model consists of three main revenue sources: Atlas, Enterprise Advanced, and Professional Services [2]. - Atlas is the core business, accounting for approximately 72% of total revenue in Q1 FY2026, with a year-over-year growth rate of 26% [2][7]. - Enterprise Advanced, which is a downloadable software for non-cloud applications, has seen slower growth, with a year-over-year increase of only 7% [3]. Group 2: Financial Performance - In the last quarter, MongoDB's total revenue grew by 22% year-over-year, surpassing analyst expectations of around 15% [7]. - The company reported a non-GAAP gross margin decrease from 75% to 74%, which is considered normal fluctuation [9]. - The company has a strong balance sheet with total liabilities under $600 million and current assets exceeding $2.8 billion [12]. Group 3: Future Growth and Valuation - Analysts expect MongoDB's revenue to grow from $2 billion to $2.3 billion by the end of FY2026, with free cash flow projected to reach approximately $550 million, reflecting a nearly 30% increase [12][15]. - The expected price-to-free cash flow ratio is projected to decrease from 40x to a more acceptable 31x, making the stock potentially attractive for investors [13][14]. - The company is anticipated to maintain a compound annual growth rate (CAGR) of around 15% to 20% due to the increasing demand for non-structured data driven by digitalization and cloud computing trends [13][16]. Group 4: Challenges and Risks - MongoDB faces challenges related to significant equity dilution and high valuation, which could hinder capital appreciation [12][16]. - The reliance on the emergence of new non-structured data and a stable macroeconomic environment is crucial for continued growth [16].