Box, Inc.BOXNYSE
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Operator: Ladies and gentlemen, thank you for standing by. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Box, Inc. Third Quarter Fiscal 2026 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 a second time. Thank you. And I would now like to turn the conference over to Cynthia Hiponia, Vice President of Investor Relations. You may begin.
Cynthia Hiponia: Good afternoon, and welcome to Box, Inc.'s Third Quarter Fiscal 2026 Earnings Conference Call. I am Cynthia Hiponia, Vice President, Investor Relations. On the call today, we have Aaron Levie, 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. Supplemental slides are now available also on our website. On this call, we will be making forward-looking statements, including our fourth quarter and full-year fiscal 2026 financial guidance, and our expectations regarding our financial performance for fiscal 2026 and future periods, including 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 deferred tax expenses, 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. Our ability to address enterprise challenges, enhance our product capabilities, 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 and settlement of our convertible debt. 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 file with the 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 call. These forward-looking statements are being made as of today, December 2, 2025, and we disclaim any obligation to update or revise them should they change or cease to be up to date. In addition, in today's call, we discuss non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results in our earnings press release and in the related supplemental slides, which can be found on the IR page of our website. Unless otherwise indicated, all references to financial measures are made on a non-GAAP basis. Thank you. With that, let me turn the call over to Aaron.
Aaron Levie: Thanks, everyone, for joining us today. Building on the momentum and strong results we delivered in the third quarter of 2026, revenue exceeded our guidance, growing 9% year over year and producing operating margins of 28.6%. We drove a net retention rate of 104%, ahead of our expectations of 103%, driven by both price per seat increases and seat expansion. Our ongoing strategic investments in go-to-market and products are driving growth, reflected in our Q3 billings growth of 12% year over year and RPO growth of 18% year over year. Our strong financial results clearly demonstrate that our intelligent content management platform is building momentum in the market. Just a few weeks ago, I met with dozens of CIOs and IT leaders in New York. What struck me was how the conversations have evolved over time, where the vast majority of these discussions now focus on new use cases for Box, around using AI agents for extracting structured data and insights from documents, using AI agents to automate knowledge worker tasks, or leveraging AI agents to democratize access to expertise across their organizations. The full power of AI agents is delivered when you can begin to augment knowledge worker tasks with infinitely scalable automation. But as companies try to do this, they quickly come to the same conclusion. The key to success is ensuring agents have access to the right data, in the right format, and can process it effectively and securely at scale. When trying to solve this problem, most enterprises experience how difficult this can be. Enterprises are understanding that not only do you have to excel at everything required for AI on unstructured data, which could mean combining and keeping up with dozens of different technologies, you also need a platform that can handle the security, compliance, access controls, creation, sharing, and storage of all of this enterprise content. The problem is only getting harder as more platforms emerge that need to talk to the same unstructured data assets. You cannot easily replicate your files across agentic systems like Salesforce, Google, ChatGPT, ServiceNow, and hundreds of other platforms, all of which have different security and governance models, access controls, and more. Companies will increasingly need a trusted AI platform to manage their most important enterprise content that can work with all of their agentic AI platforms. This is what we are building with the Box AI platform. Box is the secure, neutral AI content platform for the most important enterprise content. It is the single source of truth that connects AI models and agents, prevents the content sprawl and security risks of DIY solutions, and ensures data governance and compliance. Best of all, we integrate with OpenAI, Google, Anthropic, AWS, IBM, and more, so customers can use any model without fragmenting their enterprise content. As we have shared, we introduced Enterprise Advanced less than one year ago to bring together our full suite of powerful AI intelligent workflow automation capabilities. Enterprise Advanced continues to drive both upgrades and new logo wins across verticals, segments, and geographies. Examples in Q3 include a leading financial services organization that upgraded from Enterprise Plus to Enterprise Advanced to improve management and search across repositories, including an archive of historical records. By using Box apps and metadata extraction, the organization is streamlining workflows in claims management, HR, legal, member services, and migrating nonmember documents from legacy systems to Box. This supports AI-assisted research into over a century of corporate history and provides updated interfaces for data management. A leading international law firm, an early adopter of Enterprise Advanced in 2025, expanded its use of Box by hundreds of seats in Q3. Driven by Box's proven ability to deliver secure solutions and AI-driven workflows, our platform will support projects with government clients requiring FedRAMP high compliance, enabling lawyers to collaborate securely and efficiently on sensitive matters. Finally, a leading renewable energy company in EMEA, a new logo for Box, chose Enterprise Advanced to modernize its document management and collaboration processes across multiple departments, including legal, compliance, security, and IT. By implementing Box, the company aims to streamline document workflows, improve metadata management, and enable secure external collaboration with partners and regulators. To build on the momentum we are seeing with customers, we recently announced a new set of next-generation AI agent and automation features at BoxWorks to drive intelligent workflows in the enterprise. This included Box Extract, a data extraction solution powered by AI agents that delivers accurate data and insights from a multitude of content types, including documents, presentations, images, and more. This new capability allows enterprises to easily extract any structured data and insights from their unstructured documents, from contracts and invoices to healthcare records to insurance claims and more. We also announced Box Automate, an agentic workflow automation solution designed to orchestrate work across agents and teams. Box Automate allows customers to design sophisticated workflows, leverage their content in Box, as well as connect to other systems via APIs to power any end-to-end document workflow. Additionally, we announced powerful AI capabilities for Box apps, our no-code solution for quickly building content apps that will continue to get major product upgrades that enable our customers to power more advanced business processes on Box. We announced Box Shield Pro, a powerful new suite of security capabilities powered by AI, allowing customers to automatically apply AI-driven classification, accelerate threat response with agentic insights, and proactively strengthen their security posture against an evolving threat landscape like ransomware attacks. As we have seen, the rate of innovation continues to accelerate from AI model providers, and Box is quickly evaluating and enabling updates for our customers to access the latest features and models directly in Box. We have announced integrations for the newest models from Mistral, Anthropic, OpenAI, and Google, including being a day-one launch partner of GPT 5.1, Gemini 3, and 4.5. We have added support for OpenAI's agent kit so customers can bring Box content into their agentic workflows. Made Box AI available in Gemini Enterprise through the Google Cloud Marketplace, and introduced support for Slack's new work objects to bring Box's intelligence capabilities directly into Slack conversations. We have also strengthened our long-term strategic partnership with AWS with a recent announcement of a multiyear AI collaboration agreement to transform agentic AI capabilities on enterprise content. Box will become available in the AWS Marketplace to streamline procurement and accelerate the value of both platforms. We are incredibly excited about this partnership and our ability to bring the Box and AWS platforms together more deeply. Now looking forward, in Q4, we are going to be focused on delivering against the major announcements we shared at BoxWorks. In particular, I am incredibly excited for the upcoming release of Box Extract. Enterprises are awash in unstructured data that they can now tap into for the first time with AI agents processing and extracting relevant data from these documents. Box Extract makes this easier than ever. We will also be releasing other major updates to Box AI agents in Box, including an all-new centralized experience where you can interact with any AI agent from Box from one central location, allowing you to use AI agents to find relevant data or answers in Box or handle much more complex work on content in Box. We will also be upgrading Box AI Studio to support improved agent capabilities, like attaching existing knowledge to agents and streamlining the agent creation flow to make it easier for anyone to build their own agents in the enterprise. Turning to go-to-market, we are driving the adoption of Enterprise Advanced and continue to see pricing improvements for Enterprise Advanced over Enterprise Plus at the higher end of our 20 to 40% target. Our focus has been and will continue to be on driving adoption of our AI-powered solutions in Enterprise Advanced, including custom Box AI agents, Box apps, and looking forward, Box Extract, and Shield Pro across our customers' workflows. Our market positioning emphasizes Box's unique strength as a trusted platform for unstructured data with built-in AI governance and security. We are continuing to double down on our Enterprise Advanced sales motion, driving more emphasis across key verticals like financial services, life sciences, government, professional services, and more. Our partner-led business is a critical part of our strategy as we power more advanced verticalized solutions for customers. We saw continued momentum with partners, delivering double-digit revenue growth in partner-led wins. These wins include, in Q3, a leading global automotive company that upgraded from Enterprise Plus to Enterprise Advanced to centralize its expanding design ecosystem and replace over 75 fragmented content repositories. A leading housing administrator in EMEA partnered with Deloitte and Box to modernize its digital housing and tenant communications. Box powers the solution for managing documents and inquiries from housing applicants, tenants, and affiliated organizations, improving efficiency and collaboration. We also launched a new partnership with Tata Consultancy Services, one of the world's largest systems integrators, to deliver AI-powered content management solutions to accelerate digital transformation. By combining Box's intelligent content management platform with TCS's global scale and industry depth, we expanded our reach across key industries, from financial services and healthcare, manufacturing, retail, and the public sector. Before I turn it over to Dylan, let me update you on how we are expanding an AI-first approach at Box, using Box AI as customer zero. As I have shared before, we are focused on Box becoming the leading AI-first company, and we want to use AI agents to augment our productivity, increase our capacity, and better serve customers. For instance, in go-to-market, we have purpose-built Box AI agents that streamline each step in a sales or customer success process. We have a research agent that analyzes the prospect's goals and challenges, maps them to Box capabilities. A discovery agent recommends the best use cases for a customer type using win-loss signals from past deals. Coaching agents give reps tips after every customer interaction and more. In customer success, a feature adoption agent suggests use cases, target personas, and enablement materials to boost adoption. All of these agents free up our sales and support teams to serve more customers and with greater personalization. This is just in go-to-market. Across Box, we are doing the same in our HR and recruiting workflows, IT organization, legal, and compliance, and product management and engineering. Outside of Box AI, for instance, in engineering, we are leveraging Cursor to accelerate our product development velocity, and we are expanding AI-assisted coding across the code base to ship features faster. AI is the biggest shift in work that we have ever seen in our lifetimes. Boxers are embracing the opportunity to demonstrate to our customers they can transform how they work with content and AI. We are seeing customers discover new use cases that tap into the value of their data, made possible with our intelligent content management platform. With that, I will hand it over to Dylan.
Dylan Smith: Thanks, Aaron. Good afternoon, everyone. In Q3, we delivered another strong quarter with revenue, billings, and operating margin all exceeding our guidance. This outperformance was the result of continued execution against our FY 2026 priorities, investing in key go-to-market initiatives and enhancing the AI capabilities of our intelligent content management platform, generating efficiencies across the business, and executing on our disciplined capital allocation strategy. We delivered Q3 revenue of $301 million, above the high end of our guidance. This represents 9% year-over-year growth with sequential acceleration to 8% year-over-year growth in constant currency. We now have more than 2,000 customers paying us at least $100,000 annually, up 7% year over year. Suites customers now account for 64% of our revenue, an increase from 59% a year ago. We ended Q3 with remaining performance obligations, or RPO, of $1.5 billion, growing 18% year over year and up 19% in constant currency. Short-term RPO grew 14%, both as reported and in constant currency. This growth is being fueled by strong customer demand for AI, resulting in a pronounced upgrade cycle and longer contract durations. We expect to recognize roughly 55% of our RPO over the next twelve months. Q3 billings of $296 million were up 12% year over year, both as reported and in constant currency, driven primarily by strong bookings in the quarter. Billings growth exceeded our guidance of approximately 10% and includes an FX headwind of approximately 220 basis points versus our prior expectations. We ended Q3 with a net retention rate of 104%, up from 103% in Q2 and 102% in the year-ago period. This trend is being driven by strong Box AI and Enterprise Advanced momentum, resulting in accelerating bookings and lower dollar churn. We continue to see improvements in both seat price and seat expansion. We now expect to exit FY 2026 with a net retention rate of 104%, one point higher than our previous expectations. Q3's gross margin was 81.7%, exceeding our guidance of 81%. Excluding the tailwind from data center equipment sales in Q3 of last year, this represents an increase of 50 basis points year over year. We delivered Q3 operating income of $86 million and an operating margin of 28.6%, exceeding our guidance. In Q3, we delivered EPS of $0.31, in line with our guidance. This includes a headwind of approximately $0.15 from FX versus our prior guidance. I will now turn to our cash flow and balance sheet. In Q3, we generated free cash flow of $61 million and cash flow from operations of $73 million, up 717% year over year, respectively. We ended Q3 with $731 million in cash, cash equivalents, restricted cash, and short-term investments. Turning to our share repurchase plan, in Q3, we repurchased 2.4 million shares for approximately $77 million. As of October 31, we had approximately $35 million of remaining buyback capacity. Additionally, our Board of Directors recently authorized a $150 million increase to our share repurchase program. Before turning to guidance, I wanted to address our $250 million of convertible notes due to mature on January 15, 2026. At that time, we intend to settle the outstanding convertible debt principal with cash. With that, let me now turn to our Q4 and FY 2026 guidance. As a reminder, approximately one-third of our revenue is generated outside of the U.S., with roughly 65% of our international revenue coming from Japan. Since we last provided guidance, the U.S. Dollar has strengthened versus the yen, and the following guidance includes the expected impact of FX, assuming current exchange rates. For the 2026, we expect Q4 revenue to be approximately $304 million, representing approximately 9% year-over-year growth or 8% in constant currency. We anticipate our Q4 billings growth to be in the low single-digit range, including an expected tailwind from FX of approximately 70 basis points. We expect Q4 gross margin to be approximately 82%. We anticipate our Q4 non-GAAP operating margin to be approximately 30%. We expect our Q4 non-GAAP EPS to be $0.33. Weighted average diluted shares are expected to be approximately 147 million. For the full fiscal year ending January 31, 2026, we are proud to have delivered strong year-to-date results driven by customer demand for our enterprise-grade AI capabilities, translating into the momentum we are seeing in Enterprise Plus and Enterprise Advanced. As a result, we now expect our full-year revenue to be approximately $1.175 billion, representing approximately 8% year-over-year growth or 7% in constant currency. Adjusting for currency movements, this represents an increase of approximately $5 million versus the midpoint of our prior guidance. We expect our FY 2026 billings growth to be in the 9 to 10% range. This includes a tailwind of approximately 130 basis points from FX, 100 basis points lower than our previous expectations. Adjusting for currency movements, this represents an increase of 150 basis points versus our prior guidance. We expect FY 2026 gross margin to be approximately 81%. When adjusting for the tailwind from data center equipment sales last year, which also flows through to operating margin, this represents a year-over-year improvement of 40 basis points. We expect our FY 2026 non-GAAP operating margin to be approximately 28%, including a tailwind of approximately 10 basis points from FX. We now expect FY 2026 non-GAAP EPS of approximately $1.28, including an expected tailwind of approximately $0.02 from FX. This represents an increase of $0.01 versus the midpoint of our prior expectations and an increase of $0.03 normalizing for currency movements since our previous guidance. Weighted average diluted shares are expected to be approximately 149 million. We are proud of the strong results we delivered in Q3, with demand for Box AI and adoption of Enterprise Advanced driving an acceleration in top-line metrics. With our ongoing strategic investments in go-to-market initiatives and our intelligent content management platform delivering strong returns, we are well-positioned to capitalize on the opportunity ahead while delivering significant long-term shareholder value. With that, Aaron and I will be happy to take your questions. Operator?
Operator: And we will now begin the question and answer session. If you have dialed in and would like to ask a question, please press 1 on your telephone keypad to raise your hand and join the queue. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, it is 1 if you would like to join the queue. Our first question comes from the line of Matt Balik with Bank of America. Your line is open.
Matt Balik: Great. Thanks for the question here. I wanted to ask kind of a high-level question. Kind of turning back the clock to the March Analyst Day where you outlined several growth levers that you would be able to use to get to that 10 to 15% growth target over the long term. I guess, since March, could you comment directionally on how you are feeling about each of those growth levers as contributors? Are we ahead of schedule, kind of in line? How should we think about that?
Aaron Levie: Yeah. So if you look back at a lot of those growth levers, I would say that certainly, all of those are tracking quite well. The adoption, just the timing of when we started to see the impact of Enterprise Advanced and some of our newer AI capabilities, is exceeding our expectations. That shows up in a lot of the trends around pricing as well as an improvement in net seat growth. So that is kind of the upsells and seat expansion dynamic. The new customer acquisition has certainly been tracking well, especially given some of the green shoots we are seeing in EMEA, and we hope to supercharge that with a lot of partner and SI investments and relationships that we are building. Finally, related to Enterprise Advanced as well, that platform expansion, especially in the form of AI units, is tracking nicely as well. Yep. So all three, certainly.
Matt Balik: One quick call if I could.
Aaron Levie: Oh, sorry. Go ahead.
Matt Balik: Awesome. Thank you. Yeah. Appreciate it. I have also noticed sales and marketing has gradually improved as well. Maybe if you could help unpack the drivers of that sales and marketing efficiency and help us think about general Salesforce productivity, maybe your hiring intentions for this year and next year, whether or not that is in line and tracking. Or if those improvements in productivity are making you more willing to hire on the go-to-market front.
Aaron Levie: Yes. We kind of laid out that this was a year where we wanted to be investing incrementally more in sales capacity, some of our vertical efforts, going deeper with system integrators and our partner ecosystem. We shared that at Financial Analyst Day and, obviously, throughout this year, various updates. We are very happy with the results that we are seeing thus far on those investments, both in the near-term productivity but also more of the qualitative impact that we are seeing. Building long-term partnerships, building more pipeline around those, as we shared today. Being listed in the AWS Marketplace, which is coming soon, will add additional channel distribution support for us. We called out the Deloitte deal, what we are doing with TCS, Slalom, DataBank, IBM, and many others. That partnership channel is going to continue to build out. We continue to believe and are bullish on the overall go-to-market investments that we have made as well as our platform investments. I think you will continue to see that from us going into next year.
Operator: And our next question comes from the line of Brian Peterson with Raymond James. Your line is open.
Brian Peterson: This is John for Brian. I want to start on FedRAMP High on the FedRAMP High authorization you received earlier in the year. Any details you can share on how the federal vertical is doing for you guys? Maybe how we should think about the pipeline of business there? And if the government shutdown had any impact on late-stage deals and type? Then I have a quick follow-up.
Aaron Levie: Yes. So FedRAMP High was very important for us to be able to get into many of the more sophisticated and complex government deals. That is increasing our ability to serve DOD customers for more and more mission-critical work. We are seeing good momentum there on the sales conversations and pipeline build. We also announced the partnership with OneGov out of the GSA, so I think we are getting even more support and general air cover within the federal government IT ecosystem. While we did see a couple of incremental shifts on deal timing as a result of the shutdown, we feel very confident in the momentum that we are seeing now coming into Q4. Overall, we are finding the federal business to be fairly strong at the moment.
Brian Peterson: Great. Great color there. I think the last few quarters, you have mentioned the return to seat growth. I want to dig in there a bit more. Is that being driven somewhat by the macro recovery? Is that fair to say that it is being driven somewhat by the macro recovery? But just more by AI-enabled workflows expanding seats? While I realize you are not guiding to it for next year, how should we think about the seat dynamics as we head into next year? Thanks.
Aaron Levie: Yeah. So I would say, certainly, there is a macroeconomic back element to our business, but it does not seem as though that has been changing a whole lot over the last couple of quarters. I would mostly point to the impact we look at the deals and where we are seeing those seat expansions really coming from the newer use cases and the expansions that Enterprise Advanced and the AI capabilities enable, so we primarily point to that. Going forward, we have said that over time, we do expect that net retention rate to continue to improve from where we are and for those seat trends to continue moving in the right direction over time as well. To your point, having given specific numbers for next year, over time, we do expect continued strength, and those trends continue as well. Just actually, if I can, the one thing I was going to add to my prior comment was, we did see healthy deals in Q3 in the public sector. Obviously, the government shutdown was more later in the quarter, but we had a bunch of good wins and expansions in the public sector in Q3.
Operator: As a reminder, it is star one if you would like to ask a question. Our next question comes from the line of Josh Baer with Morgan Stanley. Your line is open.
Josh Baer: Great. Thanks for the question. Aaron, I was just wondering, I mean, Box and you have been very forward-thinking and strategic, innovative with all things AI and agents. What does that do for the broader core content management opportunity? Just from a competitive perspective, thinking about incumbents, legacy vendors, does it serve as a catalyst with all the market focused on AI and innovation to see some of the differences in how you have approached those changes versus legacy vendors?
Aaron Levie: Yeah. So I think it is interesting. There are maybe two dynamics at play. As I mentioned in some of the conversations in New York a few weeks back, you can imagine it is sort of most of the major banks and private equity firms that we spend time with in the city. What is happening is you have two dynamics playing out. One is there is just an instant obvious recognition of, okay, if we could finally structure our unstructured data, which is take equity research, take credit data, loan origination documents, any of that information where today, you are doing a lot of manual reviews of that information. Now agents can go and extract that data from the documents, put it into the Box metadata system so you can query it. You can run analytics on it. You can import it into Snowflake or a Salesforce data cloud so you can manipulate it like structured data. But again, the source material is all this unstructured content. All of our conversations were around being able to tap into this vast array of unstructured data. The first thing that is going to happen is the content management market in general is going to grow as a result of now all of these new use cases that companies can do for the first time. I would say maybe 70 to 80% of the conversations that I had against dozens of conversations, there was not even a legacy infrastructure or document management system in the conversation. It was net new use cases where for the first time ever, a company could tap into the value of what is inside of this unstructured data. I think you are going to see just a TAM increase for the overall content management market. That will benefit us, I think, disproportionately, but it will benefit generally the space, which is great because we have sort of all been living in this world in the content management space of there is so much value in this data that companies have not been able to tap into. Now for the first time ever, they can, which will increase the overall investment and excitement around the category. The second component, which really gets to the legacy takeout, is we had a number of customers that basically say, well, okay, if I am going to now run agents on my unstructured data and I am going to plot all these insights or automate a workflow or build a Box app to power a business process, well, now I want to move even more of my data into Box to be able to go and handle that. That is really where you are seeing more and more customers say, okay, how do I get rid of a legacy ECM system? What is that migration path? That conversation also came up multiple times just in this a few weeks ago as just one interesting example. It is happening across the board. We are seeing way more interest and energy momentum around legacy takeouts and migrations where AI is the catalyst that is opening up the new use cases that are causing customers to say, okay, now is sort of time to go move our infrastructure to the cloud. We saw that a few years ago with security as one of those catalysts, but AI is going to be much bigger because you are actually now generating real new value propositions for the customer in the process.
Josh Baer: Awesome. Thanks, Aaron.
Aaron Levie: Yep. Thanks.
Operator: Our next question comes from the line of George Kurosawa with Citi. Your line is open.
George Kurosawa: Hey. Thanks. I am on for Steve Enders. I wanted to follow up on this line of thinking. When you first announced Enterprise Advanced, the obvious big opportunity was on the price per seat and the pricing uplift side. It has been interesting to hear you guys talk more and more about use case expansion and the seat growth side. I would just love to hear more on what you have seen there. How meaningful you think that could be from an NRR standpoint over the long term.
Aaron Levie: Yeah. Maybe just to highlight, we are seeing continued strength in both components. What we thought Enterprise Advanced would impact the business and customer economics, but just more recently, over the past couple of quarters, been highlighting that net fee for a net growth dynamic because that is really what has changed, whereas the pricing has gotten stronger. We have been really pleased with the impact it is having. It is just that had been a driver of NRR and growth for a longer time period. In terms of the overall impact, we would say certainly, the overall seat dynamics are where we see probably the biggest area of upside. That is also when you looked at the trend and where things had declined previously, that was also the biggest driver. We do see that as probably the most variable part and biggest opportunity for the net retention rate to improve. At the same time, as we get more and more customers moving into Enterprise Advanced and adopting some of the other capabilities of the platform, we continue to see both seat count, as well as pricing, to be pretty important levers in that algorithm.
George Kurosawa: Okay. Great. Then I know I am a quarter early here on asking about FY '27, just when we think about the exit revenue growth rate of 8% constant currency relative to billings growth of 12%, CRPO growth of 14%, maybe you could just help us think through your kind of confidence on maybe a path towards acceleration into next year and what that might look like?
Aaron Levie: Yeah. As noted, we are squarely focused on returning to double-digit top-line growth. I would say that some of those leading indicators, billings, especially on a quarterly basis, and even current RPO, are not perfect leading indicators because of some of those dynamics around contract durations, the kind of midterm upsells that we have been seeing, and things like that that help fuel the number. I would say that the underlying momentum that you can see in the business, the trajectory of revenue, is a pretty good indication of the momentum that we are seeing in the business. Certainly, to your point, we will share a lot more about our expectations and the different parts of growth and how we are thinking about it in just a few months on our Q4 call.
George Kurosawa: Thanks for taking the questions.
Aaron Levie: Thank you.
Operator: Our next question comes from the line of Fredrik Gooding with William Blair. Your line is open.
Fredrik Gooding: Patrick Gooding here. I am just curious. I guess, slightly piggyback on the previous question, but also backing it up a little bit in terms of broader AI adoption. I guess, are we nearing an inflection point in terms of enterprises overcoming some of those barriers of AI adoption? It would be great to also get some slight additional color in terms of some of the specific capabilities within the Box platform where you are seeing some of these use cases really being unlocked.
Aaron Levie: Yeah. I think we have always been in the sweet spot of AI, which is we have embedded the more kind of productivity-oriented, helping you with your daily knowledge work just into all of our plans. Instantly, customers get this added value proposition just by virtue of using Box. The capabilities that we really monetize are showing up in Enterprise Advanced. Those are going after very, very pragmatic workflow use cases, again, often oriented around data extraction being the kind of core of what the customer is trying to do. At least that is the ingredient into the workflow that they are trying to automate. We are seeing conversations across the board. I will start with the kind of most obvious ones, and then we can expand. The super obvious ones are customers are saying, hey, I have 10,000 or 50,000 or 100,000 contracts or millions of contracts in some large enterprise cases. I want to be able to extract the data from those contracts and then be able to automate workflows around them. Think about the same use case for an invoice or a lease agreement or a loan origination process. That type of conversation is causing a lot of the Enterprise Advanced upgrades to happen right now because to get access to Box apps where you would build and construct the data views and the dashboards and the applications around that, you need access to Enterprise Advanced. With Box Extract coming live in Q4, it is only going to further accelerate the adoption of Enterprise Advanced because now customers have an interface opposed to just doing the data extraction with our agentic APIs. They will be able to do that now directly built into the Box interface. That is the initial tailwind. What is really cool is we are starting to see use cases that customers have, and this is what makes us again so bullish about the overall category, where the customer was likely not in a data extraction addressable market previously. Where agent agents being able to now read documents and process them and provide insights in them or extract information is sort of expanding the use case of workflow automation around documents. These are things like where customers might have healthcare records or medical billing claim data where they were manually processing this data previously. They have never been able to really bring any form of AI automation to the workflow before. Those kinds of workflows are being automated on the platform, which just for us increases the addressable market of now what we can bring automation to. We are seeing a lot of these types of use cases emerge. There is not really the kind of typical maybe headwinds you would see, which is, okay, you have an AI adoption council or governance committees because this is squarely workflow automation where agents are just enabling the workflow to get automated. I do not think we are going to see a lot of headwinds on the momentum on this front. It is really just up to our own execution and our ability to get the whole customer base to be educated on the capabilities and to drive that upgrade cycle.
Fredrik Gooding: Okay. Thanks for the color. Then, Dylan, for you, it would be great if you could rank order in terms of some of the priorities of go-to-market investment. I know you touched previously in terms of investing in the system integrators and partner ecosystem, but I am wondering if we throw in the multiproduct, multi-product slash cross-sell motion in there, and then also trying to balance that in terms of margin expansion or potential margin expansion for 2027, how should we think about that as well?
Dylan Smith: Yeah. In terms of the initiatives, a lot of the focus areas, if you think about whether it is the increased focus on verticalization or really driving Enterprise Advanced, that cross-sell, upsell, that you mentioned, that is really embedded in the way that we are just enabling our entire Salesforce. From a pure investment standpoint, we are growing the size of the Salesforce, but it is hard to parse that out as individual stack-ranked priorities. In terms of the specific areas of investments, certainly one of the big ones is around the partner SI ecosystem. Another big area, in addition to just a lot of the reps we have, is really that verticalization of the Salesforce. Bringing in that industry-specific expertise, which we already have in a lot of cases, but really doubling down there, especially given the types of use cases that Enterprise Advanced enables, are a couple of big investment areas on the sales side. Really continue to scale a lot of the high ROI marketing programs that we have been delivering as well. Really pleased with the results there. That will be another area of investment. As it relates to the big picture view of the business, again, we will certainly give more specifics on our Q4 call when we talk about specific numbers for next year. Overall, we have been very pleased with the results of the go-to-market investments that we have been making this year. As Aaron has been talking about, we are in the midst of a massive AI transformation. If we continue to see the strong ROI of those investments, we plan to invest to really capitalize on that opportunity and to deliver another year of moderate operating margin expansion. Certainly remain committed to the long-term target model that we laid out at Analyst Day. Given the opportunity in front of us and what we are seeing in the business, we are very much focused on continuing those go-to-market investments.
Operator: That concludes our question and answer session. I will now turn the conference back over to Cynthia Hiponia for closing remarks.
Cynthia Hiponia: Great. Thank you, everyone. I appreciate you joining us here this afternoon, and we look forward to updating you again on our Q4 call in early March.
Operator: Ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.