Conference Transcript - BOX 2026-06-11

Lucky Schreiner, Analyst — DA Davidson & Co.

Great. Well, my name's Lucky Schreiner, software analyst here at DA Davidson. Very happy to have Dylan Smith, co-founder and CFO of Box here with me. You guys have come off a quarter returning to double-digit growth. Enterprise Advanced is trending really well in the market, highly profitable, a lot to like here. But maybe for any potential newer investors, can you level set for them what Box does, how you've expanded into a broader platform, and where you're seeing the most momentum today?

Dylan Smith, CFO

Sure. So maybe starting, but very briefly going way back and for the first, you know, 10 years or so of our company, we're really more in the, what you might call, you know, enterprise file sync and share. So still very focused on serving the world's largest enterprises and with a deep focus on security, having an open platform, all of those things, but much more basic file sharing, you know, file management, And how do you just, you know, secure your content at scale? Then over the next several years, increasingly built out more and more capabilities that look a lot more like a new take on traditional, you know, enterprise content management. So how do you govern the files? How do you have the advanced security capabilities, workflow, you know, a lot of the things like that, you know, building some of your own apps. And then more recently, and what's been really exciting, is now taking that underlying content platform that we've been building for more than two decades and really unlocking a lot of the intelligence that is sitting totally underutilized in unstructured content. And that's, you know, really because the benefits of AI and a lot of the capabilities that we've been introducing over the last 18 months, including, you know, many which show up in Enterprise Advanced, our highest tier suite that Lucky had mentioned a bit ago. And so that's now taking things like Box Extract, where you can upload any sort of file and pull out effectively the structured data, whatever information is in there, you know, expiration dates, you know, problematic terms, you know, kind of risky and personally identifiable information, those sorts of things. You marry that with things like Box Automate to really build much more powerful workflows and replace a lot of those things that kind of traditional content management or maybe, you know, a BPO firm was doing or just, you know, was not getting done because the cost to value ratio didn't make any sense. And so the way that shows up with Enterprise Advance, what we're really excited about seeing our customers doing is really now, you know, seeing Box able to power these really high value key solutions for our customers. So if you think about anything that is really repeatable, content-centric type workflows from contract lifecycle management, digital asset management, client onboarding, a loan origination process, these types of things, now Box can really solve end-to-end in a much faster, I mean, it's kind of a better, faster, cheaper trifecta versus what companies had been doing traditionally.

Lucky Schreiner, Analyst — DA Davidson & Co.

Yeah, it's compelling. You know, from an enterprise perspective, macro backdrop, where is the budget coming from? How are you seeing budgets shape up for AI? Everyone's trying to implement it correctly. Are customers having to pull budget from somewhere else to implement AI?

Dylan Smith, CFO

In some cases, and, you know, that might show up as a, hey, we're going to have more, you know, metered headcount growth to be able to fund some of these things. Maybe it is a reduction in, you know, like outside services spends, like with BPOs that I was mentioning, where if, you know, you were spending, you know, a million dollars for, you know, an army of people to do this manual work, and now you can do it in 10% of the time for a couple hundred thousand dollars, you know, that's a pretty, you know, easy choice. to a lot of the, you know, kind of maybe point solutions or, you know, parts of the technology stack that are maybe less relevant, you know, in today's world or less valuable. So trade-offs are definitely being made, but I wouldn't say there's been a dramatic shift in terms of, you know, how our IT buyers are thinking about at least the spend a box. I mean, certainly, you know, I think everyone, and especially more recently, is a lot more mindful of the costs, especially if not managed thoughtfully, of AI and tokens in particular for some of the coding and other use cases. So I'd say things are different than they were a year ago, but, you know, our economic buyer, how we describe the overall demand environment, et cetera, has remained very

Lucky Schreiner, Analyst — DA Davidson & Co.

healthy. Got it. And on your enterprise advanced tier that typically comes with a 30 to 40 percent pricing uplift from Enterprise Plus. How durable do you see that moving forward? And how often are customers also expanding their seats with you when they upgrade to Enterprise Advanced?

Dylan Smith, CFO

Yeah, so we see that as very durable. And since we had launched Enterprise Advanced, we've been seeing pricing uplifts actually at the higher end of that range. And because of just our confidence in and seeing the type of value that customers are really able to get out of enterprise advanced um you know our team has done a great job uh really being disciplined um about that pricing uplift because you know we know there's the value and if we do our job and walk customers through that um and even get them you know kind of testing uh and uh and seeing some of these use cases off our lower tier plans um you know we have the confidence that we'll be able to get that type of uplift uh on the pure pricing side and then on top of that there's not only for some of these really high-volume use cases, incremental AI units being sold in addition to the enterprise advanced upgrade, and in a little more than a third of cases, customers are also expanding seats, to your question, Lucky, because enterprise advanced is now opening up use cases where maybe before, going back to some of the solutions I was talking about, for the legal team or the marketing team, maybe the content management solutions that they had in place previously were good enough, but now with these newer capabilities, customers are saying, okay, I absolutely need my entire legal team to be on Box because it's our new contract lifecycle management solution as just one example. And so it's really the new use cases that we're enabling and unlocking with Enterprise Advanced that is driving that seed expansion.

Lucky Schreiner, Analyst — DA Davidson & Co.

Yeah. I mean, it's a big debate today in software. the trajectory of seats. So you brought up the consumption pricing. How do you feel like Box is positioned from a monetization standpoint? And are there cases where you've seen really nice agentic consumption adoption and seat growth at the same time? Are those mutually exclusive? Or maybe what are some of the dynamics that you see with customers? Yeah. So today we're seeing them

Dylan Smith, CFO

go hand in hand, certainly very mindful of and getting pulled into the debate on is the seat model dead? Are knowledge workers going to be, you know, are we going to lose a lot of knowledge worker jobs? You know, we feel actually, and what we're seeing in our customers in a lot of cases is actually AI is enabling those workers to be a lot more productive. And so, you know, there's certainly going to be an impact and, you know, roles are changing already. And I think that will continue um but um you know we are we are not seeing that in our customers today um you know whenever there is any sort of layoff that's going to make the news uh but when you look across our enterprise customer base you know the vast majority like we you know that has no you know relevance to us like we're seeing these opportunities um etc and rolling out agents And so we see, you know, in most cases, companies both, you know, starting to think about or introduce agents as a kind of complement, supplement, whatever you want to call it, to the workforce, but, you know, not a significant change in terms of, you know, kind of the core knowledge workers either. And in terms of our positioning, you know, really fortunate that, again, that platform that we've been building that I talked about that, you know, for the last 20 plus years is just as relevant, if not more relevant and important in a world where you have agents instead of knowledge workers doing those same tasks. Because not only do you have, from just a volume standpoint, an order of magnitude more agents than humans, but they also don't have the EQ or understanding of what they should or shouldn't have access to, what this person who's in the workflow or who they're sharing content with should or shouldn't have access to. They don't fear a job loss if they're doing something that they know they shouldn't be doing, right? And so the security, the permissioning, the compliance, all of those things that have been core differentiators for effectively our entire history become even more important in a world where you have an order of magnitude more agents doing this work.

Lucky Schreiner, Analyst — DA Davidson & Co.

Yeah. On the platform consumption revenue, it makes up about 6% of revenue today. You guided at your analyst day that's going to have a 30% growth CAGR, make up 10% of revenue over the next three to five years. Maybe what are some of the assumptions that went into that kind of guidance? What needs to happen for you guys to hit that?

Dylan Smith, CFO

Yeah. So I expect that to be 10% of our revenue three to five years from now, not revenue we generate over the next three to five years, just to clarify. But really think the main driver of that is going to be AI unit consumption. Because today our kind of platform business is the consumption, you know, volume based, you know, effectively API calls that might be, you know, box sign calls or just overall, you know, API access. What we're really seeing driving and we expect to continue to drive the vast majority of that growth over the next three to five years is these newer use cases that really are powered by or monetized by AI unit consumption. So effectively our way of abstracting, you know, kind of the token and AI usage. And we're seeing very healthy demand, you know, pipeline for that already talked about. And what gives us the confidence in driving that is not only the solutions that we're rolling out and the way that customers are starting to use Box today. But, you know, another key growth area for us is really our relationships with systems integrators. And so that's where they have a lot of these types of use cases that really do rely heavily on consumption and AI units. So that'll be a catalyst to that overall platform growth as well over the next few years.

Lucky Schreiner, Analyst — DA Davidson & Co.

Yeah. And then on the long-term guide, you guys had guided to 10% to 15% growth. You got into 10% constant currency growth for the next quarter. um what are you know some of the key drivers of that growth outlook and and really your your recent go-to-market investments with partners how has that evolved your go-to-market and and

Dylan Smith, CFO

what additional investments are you making there yeah so if you think about the the kind of key drivers of of the future growth and where we see the biggest opportunities first of all there's kind of you know i'd say is um you know moderate improvement in the you know kind of core growth drivers, right? Seat growth, price per seat, those are both growing at a faster clip than they were a year ago. We expect them to be growing at a slightly faster clip a few years out as well. So that's, and largely driven by just the continued momentum of enterprise advanced and the impact that has on the business. As exiting this most recent year, that was about 10% of our total revenue attributable to enterprise advanced customers. We expect that to be 20% at the end of this year and then the majority of our revenue three to five years from now. And so that's kind of the first driver. The next one really is around some of the partners and that ecosystem. So not only the systems integrators, but seeing and very excited about the opportunity that we have with marketplaces as well. So if you think about the hyperscalers and the way that Box is increasingly driving these workloads, a lot of incentive to build those partnerships. Very excited in particular about our relationship with Amazon and AWS. I think that can provide some lift. And then there's the platform component that, again, as talked about, expect that to be growing at a much faster clip than our kind of core business and to make up about 10% of our revenue in that timeframe as well. And so you put those things together and add on the fact that, for example, we have less than 10% of our revenue coming from all of EMEA. And so in some of our international markets, if we can get growth at more levels and penetration, more commensurate with enterprise software spend, I think that can be an area of upside in the model as well.

Lucky Schreiner, Analyst — DA Davidson & Co.

I wanted to follow up on the legacy displacement opportunity, especially with partners. You guys have a big opportunity there, just given a lot of these solutions are expensive, hard to maintain, enterprises are looking for AI capabilities. So maybe how does that pipeline look to be shaping up today and how are partners helping you with that process?

Dylan Smith, CFO

Yeah, so I'd say still early days in the minority of the deals that we're getting in, but certainly healthier and a bigger component of our business than it has been at any point in the past. As if you think about, you know, just the ways, if you're trying to get all the benefits of AI that we've been talking about that, you know, the world's been talking about, it's, you know, nearly impossible to do that, if not literally impossible, technically, when you have that data sitting in a bunch of fragmented, you know, slash siloed on-premises content stores, right? If you have them sitting in a data center on just those servers or in a combination of Documentum and OpenText and FileNet and wherever else, that's just not going to be accessible to AI, much less in a single platform where you get the compliance, the security, and the overall management of that. So we are seeing that as a catalyst. I think that's one of the big reasons that going back a couple of years ago and as AI was starting to really take off and these partners were seeing the writing on the wall and hearing about that writing from their customers. um they're saying hey this thing's been in place for you know 20 maybe literally 30 years but i need to modernize the way i think about content it's becoming a much more strategic area whereas before is kind of like all right you know i get that that's not optimal but i'll deal with that after xyz and now it's becoming a critical blocker and the number of times you hear something to the effect of i don't have an ai problem like i have access to the tools, the technology is good enough. I have a data problem, right? You can't access the data at all. And so, you know, help me solve that. That's going to be a huge effort, I think, for systems integrators. And that's where Box and those relationships become so critical.

Lucky Schreiner, Analyst — DA Davidson & Co.

Yeah. What's the catalyst for that? Is it catalyzed by new model releases where customers want to best implement those capabilities? Or is it more just upon renewal and this is a slow

Dylan Smith, CFO

a slow burn here i'd say more the latter it's it's not necessarily any individual model um as no model is going to be able to you know access those things uh and and you know uh you know get anything meaningful out of a a uh you know fragmented set of solutions certainly the more that there is competition and competing uh models from various providers that is a catalyst uh and a tailwind for Box's business because both the way that we provide access and in a lot of cases early access to all of those models, whereas with other providers or if you're going direct to an LLM, you know, you're going to have just access to their models. But with Box, it's all the same to us whether a customer is using XYZ model and we can work with them and we have the data for more than 100,000 customers to know what types of models work well for what types of use cases and they can test it themselves also. But what we can also do going back to the cost side that is increasingly top of mind for customers is, you know, if you think about it, an amazing company, amazing partner, but Anthropic is not going to care that, you know opus or now you know fable uh is maybe more expensive or more you know overpowered than a customer needs for a certain use case because they make more money right but what we can do we want to make sure customers are getting the best outcome and uh the highest roi on their spend um uh and so uh and we can use uh and we do use we call intelligent model swapping right so we can work with customers um and uh and make sure that they are using ai as effectively as efficiently as possible uh and i think that's going to be an even more important differentiator so that's really where the newer models especially more expensive models and the diversity of models because the tailwind but as it relates to the enterprise content management providers you know again it's not really the number of models it's just do you want to use ai to get insights out of your content, okay, then you probably need a system that's accessible to

Lucky Schreiner, Analyst — DA Davidson & Co.

these models. Yeah. So maybe following up on that, like you said, you have really strong partnerships with all the frontier model providers. You give early access. Do customers, are they starting to get that? What's the awareness on the enterprise side of that differentiation you spoke to? And how are you guys maybe leaning into that on a marketing perspective? I would say it's

Dylan Smith, CFO

certainly something that's appreciated um and um you know a a selling point that matters for customers i wouldn't say that most customers are like okay i know that model x is best for this model y is best for that model z is best for this and so i need these three models and you know i'm going to tell my team to use it for that you know this that and the other um i think they're still figuring that part out. But I do think that there is a lot of, call it fear of model lock-in and FOMO if they don't have access to certain types of models, because they are getting all these different requests from their employees saying, oh, I really want to use X model because I hear it's really great for these use cases. And so it's challenging, especially because they're just so much excitement and kind of bottoms-up demand for a CIO to say, well, sorry, we just have X, or we just have Y, I guess, and not X. And so you're just going to deal with it because more often than not, that employee is just going to go do it anyway and maybe put it on their personal credit card or their company credit card, and that creates even more concerns. So I think it's definitely something that's top of mind, even if the individual models and their relative strengths and weaknesses, minus maybe looking at a high-level evaluation that a firm might do. I don't think that's as well understood, but the differentiation is.

Lucky Schreiner, Analyst — DA Davidson & Co.

Maybe on that token pricing that you were speaking to earlier, what are you seeing from your customer base with regards to are they overspending on tokens? How do you think token pricing increases or decreases over time will play out, and how does Box benefit from that?

Dylan Smith, CFO

Yeah, I mean, I would say that most companies are probably spending more than they thought they would be six months ago or 12 months ago. Hard to say, yeah, I mean, overspending because it depends on what sort of ROI they're getting. But, you know, I think what we are hearing from customers is they do want to make sure and much more mindful of and want to make sure they're using the right model for the right job. So in a lot of cases, if there's a metadata or a data extraction use case, a customer will say, okay, I'm going to test it with this model, that model, and this model. What's the accuracy? What was the cost? What is kind of the optimal setup for me? And so it's definitely that kind of token efficiency. And even if you look at a lot of the public evaluations of models, they've recently added another axis, right? It's not just about how good is this model. It's how good is this model per token or per dollar or whatever it is. And so, you know, that is definitely part of the conversation. And in terms of costs, you know, I think that in terms of the cost per, like, output, you know, especially dud bright, if customers know what they're doing and if they're bought customers who are working with us, I think that will go down. But, you know, certainly the newest frontier models are more expensive than, you know, anything that came before. So I think if not done right or if you're taking just the, you know, damn the torpedoes, you know, token maxing approach, you're probably going to have a financial problem already. And even more so in the future.

Lucky Schreiner, Analyst — DA Davidson & Co.

Yeah. So a lot of this kind of comes down to customers' creativity and knowledge of how to best use the models. You guys have 250 pre-built use cases in Enterprise Advanced you identified and are going to market with. So are there any kind of focus areas that stand out to you where maybe previously incumbents had some success, but you can now come in and displace them? And what are some of the top use cases that customers are doing today?

Dylan Smith, CFO

Yeah, so I mentioned some of those solutions actually is where we are seeing the biggest opportunity and early traction, especially because not only, you know, not just because those are really high value and, you know, pretty horizontal use cases, but because in a lot of cases, customers are spending on separate tools and spending, you know, hundreds of thousands or millions of dollars for those capabilities that you can do natively within the Vox platform. or maybe that was the biggest reason and the last reason that they really couldn't move off of that legacy, you know, enterprise content management provider. So, again, things like contract lifecycle management, digital asset management, you know, different onboarding processes, you know, client management. Anytime you're, you know, exchanging information, getting information, whether that's, you know, a wealth management use case, I mentioned the loan origination process use case, things like that. That's really where things are taking off. And I would say the biggest underlying feature that is really resonating of Enterprise Advance that's actually a part of all of those use cases is box extract and that ability to really get the critical information out of unstructured content and take action according to whether that's routing to the right person or just how you're organizing that or giving a specific action to your legal team or Salesforce, that's really where the power of the platform comes into play.

Lucky Schreiner, Analyst — DA Davidson & Co.

Yeah, and you guys haven't really thought of AI as a sidecar, and you have Enterprise Advanced as your most premium tier, but you added all these AI capabilities across all tiers, and I feel like you guys were one of the first to really recognize that's the right approach. So maybe what are some of the benefits you've seen from that so far across your customer base?

Dylan Smith, CFO

Yeah, I mean, you know, what we try to do is take a step back and make a really first principles approach and say, if we were to start Box today, would we have, like, the dumb version and the smart version? No, you would just be AI-powered content management. And so that's really what we tried to do in terms of, you know, which capabilities we put into each plan. And I would say the benefit is really allowing customers and maybe our lower tier plans, it's more end user focused, but even they can say, okay, how can I generate a box note for these meeting notes or come up with an agenda for you easily or say, hey, we already have all of our latest marketing collateral. role. Now, could you design a pitch deck or, you know, whatever sort of presentation you want using our, you know, kind of branding guidelines and that'll show up. And so there's a lot of power even just in those end user use cases around content creation, validation, access to information. But really where we've seen a lot of the benefits in that tiered approach is giving, you know, some of those more advanced capabilities and offering AI units for like our enterprise plus tier. I think that's really where you get a taste of our more advanced capabilities and, you know, kind of sets the stage for an upsell to enterprise advance, because frankly, you know, in this environment and especially if you're wrestling with, okay, how am I going to afford all of the demand for, you know, these, you know, that I'm paying to these LLMs, you know, a 40% uplift is not trivial. And so giving customers the ability to test some of those use cases, effectively do a proof of concept, even without all of the capabilities of Enterprise Advanced, has been

Lucky Schreiner, Analyst — DA Davidson & Co.

really critical in those conversations as well. Yeah. And maybe if we split that, you've seen in terms of retention, net new versus expansions, you've seen your net retention steadily tick up here in recent quarters. But at your analyst day, your CRO, Jeff, was really focused on driving net new logo growth. So maybe what are you seeing on the expansion and net new side and how those two pipelines are shaping up and any changes you're making on the go-to-market side or in

Dylan Smith, CFO

terms of the sales hiring process with that? Yeah. So I would say that there are some things, what we've seen driving the growth and the net retention rate, well, by definition, the net retention rate, but really what's been driving the growth that we've seen more of the improvement recently has been around, you know, kind of seed expansion and pricing up within our install base. Net new is, you know, kind of growing at a healthy rate, that new logo growth, but hasn't seen, you know, as much of an increase historically. We do see a big opportunity, and why it was highlighted, why Jeff highlighted it, our our CRO, is because of the types of kind of investments we're making on the go-to-market side, especially going back to some of those partners, right? When you have SIs who can extend the reach of our sales force, when you have marketplaces where before maybe a customer recognized the value box, but it was just really challenging to fund that sort of purchase, well, okay, now I can use my AWS credits to do that. We think those are opportunities on the partner side, as well as, you know, some of those, you know, kind of different markets that we've made some investments in where there's a lot of potential. Those are probably the two biggest drivers of the new logo growth. But just getting the message and I think with the capabilities of Enterprise Advanced, you know, customers where maybe they're existing, you know, maybe content was not a strategic priority for the IT leadership team. Or, you know, other solutions they've cobbled together were working well enough. I do think there's been a big change there, which is why we're more confident in new logos driving more of that growth going forward.

Lucky Schreiner, Analyst — DA Davidson & Co.

Yeah. On that investment theme, you know, I've got the CFO here. You guys are very profitable. You're guiding to further profitability. AI is a rapidly changing space, though, and you've got to invest a lot to keep up with the technology change. So maybe, like, what are your top investment priorities today, and how do you maintain your market leadership position?

Dylan Smith, CFO

Yeah, so I would say, you know, kind of going back, some of it is in those new, I would say the biggest incremental span, if you think about, you know, what's the growth and where we're, you know, putting our dollars to work this year, mostly focused on the go-to-market side, also investing, you know, in the innovation of our platform on the R&D side, But because of AI, we've seen such phenomenal productivity gains that we're able to accelerate innovation. If you look at the pace of what we've released and are releasing, can do that without as commensurate of an increase in the expenses, especially when you think about the way we've been scaling up our engineering center of excellence in Poland. So really on the go-to-market side, and there it is, you know, some of the partnership investments, you know, just growing the sales force. I think now you get, you know, much more of an opportunity around that consultative approach. And so I know there's been a lot of talk about, you know, FDs for deployed engineers. We actually already have done a lot of that stuff on the consulting side. So for us, it's like, okay, now there's like a name and it seems to be cool. But, like, that's something that's, you know, been a core part of the motion that we are seeing more demand for to really implement these use cases successfully. So it really is, you know, other than the investments we're making in the partnership ecosystem, a lot of it is really just scaling out the existing functions to be able to address the demand that we're seeing.

Lucky Schreiner, Analyst — DA Davidson & Co.

On that more technical sales process, you know, Enterprise Advanced is already 10% of your revenue today. So it doesn't seem like it's lengthened sales cycles. Like, how have you maybe been able to manage that dynamic of a more technical sale?

Dylan Smith, CFO

Yeah, so I would say that, you know, a lot of it is, you know, even before enterprise advanced and leading up to it. I mean, this had been the plan for many years. We've been selling suites and, you know, things where the integrations with other platforms, you know, and the technical capabilities were already important. And so a lot of it has just been really, and I think really pleased with the way that Jeff and Olivia, our COO and others, have gotten ahead of that sales enablement. Because that kind of profile of rep who's successful and can do this sort of both solutions-oriented platform sale, but who is technical, has been really critical. But what we also do is through verticalizing a lot of the different teams that we have, whether it's the sales engineers, the box consulting folks, the A's themselves, can get really, really familiar with the specific core processes of a life sciences customer or of a financial services customer. And that breaks down into it's not just financial services, it might be insurance or wealth management or investment banking or whatever. And that helps as well, where you don't need to be where you can kind of make sure that you understand, you know, the types of systems that are in place, those types of use cases that are really repeatable, high value. And so that's been pretty helpful in terms of streamlining some of those conversations as well.

Lucky Schreiner, Analyst — DA Davidson & Co.

I do want to give some time for investor questions if anyone has a question for Dylan here. Otherwise, I can keep going. I've got plenty of questions. maybe on uh you know how you think about capital return to shareholders you guys have a have repurchased a lot of shares like what's the updated view moving forward especially as you

Dylan Smith, CFO

have so much free cash flow generation yeah i would say uh philosophically pretty consistent approach with what you've seen from us uh over the the past few years uh expecting to um you know kind of leverage the majority uh significant majority of our free cash flow generation to you know, return capital to shareholders through share repurchases. Also, you know, want to make sure that we have the dry powder for M&A to accelerate our product roadmap. And you've seen that from us as well. Although the calculus does change a little bit with AI in that they kind of build by calculus just because we can organically develop things, you know, to much faster clip than we could a couple of years ago. But, you know, I think because of that and, you know, just the confidence in that, you know, kind of teens type free cash flow growth rate over the coming years, you know, we are confident that we'll be able to continue reducing total shares outstanding steadily and pretty significantly over a multi-year period.

Lucky Schreiner, Analyst — DA Davidson & Co.

Yeah, you stole my next question. You guys have previously acquired Alpha Moon and Crew, some successful tech tuck-ins, but like you said, the product roadmap is accelerating so much with Gen.AI that it does change the build versus buy calculus. That being said, it feels like software valuations are pretty depressed here. How do you think about M&A moving forward?

Dylan Smith, CFO

Yeah, I would say we think about it again in the same way, but it's just like, you know, they're back at times. I mean, the challenge is some of the things where a company, if they are doing something that is truly unique and have, you know, amazing talent, that's probably going to be reflected in the price tag. And while, yes, I think software technology valuations, software valuations broadly, you know, maybe oversold and are, you know, fairly depressed in both public and private markets, you know, a lot of the, you know, kind of things that are going to add the most value to the box platform are, you know, not quite as depressed. So that's kind of the irony of things is, but, you know, we are still being very active in exploring those things on both the talent and technology side. So the types of deals that we've done historically, you know, whether it's half a dozen to, you know, several dozen engineers, you know, pre-revenue to a few million dollars of revenue, you know, tends to be the sweet spot for us, not because of necessarily even the price tag, but because we are so focused on making sure that acquisitions can be quickly and natively integrated into our core platform. We don't want to have a bolt-on strategy in this completely orthogonal product that happens to be in a similar space, but it's a different architecture, it's a different model, whatever else, which is why we focus on those areas and you can continue to expect that from

Lucky Schreiner, Analyst — DA Davidson & Co.

us in the future. Yeah, we're almost at time. So I'll close with in 2025, you said it was the most exciting year ahead for box. As we think about 2026, what gets you most excited moving forward? And what do you look forward to over the next two to three years? Yeah, I would say it's,

Dylan Smith, CFO

you know, really the same types of things that were so exciting last year, but frankly, a lot more real um i think then it was just like oh my god we're seeing all this potential we know what's coming down the pipe and the type of opportunity we have i mean i think at that time we had just uh released enterprise advance maybe like three months prior or something like that and we're seeing all this sort of demand these types of entirely new use cases and a massively you know uh increased amount of value that our customers were we're seeing in the box platform and now you know fast forward a year and change and customers have actually deployed those solutions. And we've rolled out even more powerful capabilities to extend that, like with Box Automate, Box Apps, et cetera. And so I think what's just really exciting is seeing the way that we can completely transform and enable customers around AI. I mean, again, I said it briefly before, but customers, when you think about what is getting in the way of being able to, you know, kind of rethink and create, you know, all of these really, really cool use cases and do new work with AI, it's not the technology, right? Like, there are probably very few customers who are like, thank God Fable came out, like Opus just wasn't getting the job done, right? Like, there's nothing, and, you know, probably, I think I'm probably using AI in more sophisticated ways than most knowledge workers, even though I'm not an engineer, but, like, Opus does everything I need, right? So Abel's like, that's not the problem. It's the data and it's the change management. And so now I think, you know, we've gotten a lot further in that journey. And so we're really seeing customers actually deploy some of these solutions that got us so excited a year ago. And I think in the year ahead, you know, that is what's most exciting is just seeing the way that all plays out when you can string together all these capabilities to really transform the way that people are getting work done.

Lucky Schreiner, Analyst — DA Davidson & Co.

Yeah, great answer. Dylan, appreciate it.

Dylan Smith, CFO

Thanks for coming. Yeah, really appreciate the time.