Box, Inc.
Q4 2021 Earnings Call Transcript

Published: 2 Mar 2021

[Operator:]

Ladies and gentlemen, thank you for standing by, and welcome to Box, Inc., Fourth Quarter Fiscal 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Alice Lopatto. Please go ahead.

[Alice Lopatto:]

Good afternoon, and welcome to Box’s fourth quarter and fiscal year 2021 earnings conference call. On the call today we have Aaron Levie, our CEO; and Dylan Smith, our CFO. Following our prepared remarks, we will take questions. Today’s call is being webcast and will also be available for replay on our Investor Relations website at www.box.com/investors. Our webcast will be audio only, however supplemental slides are now available for download from our website. We’ll also post the highlights of today’s call on Twitter at the handle @boxincir.

[Aaron Levie:]

Thanks Alice, and thanks everyone for joining the call today. As always, we hope you and your families are staying safe and healthy. I’m incredibly proud of the team at Box and the milestones we achieved in FY2021. This was a substantial year of progress across all facets of our business, strategically, operationally and financially. We exceeded our commitment to achieve a revenue growth rate plus free cash flow margin of 25%, ultimately delivering 26.3% versus 13.4% just a year ago. In addition, we drove significant margin expansion with a 15% non-GAAP operating margin, up from 1% a year ago. This year we delivered the category defining cloud content management platform to the market by making significant product enhancements in security and compliance, collaboration and workflow and strengthening our ecosystem of partner integrations, and to further expand our product portfolio at the start of this new fiscal year, we just recently announced Box Sign, our native e-signature product offering that will be coming out later in the summer.

[Dylan Smith:]

Thanks, Aaron. Good afternoon everyone and thank you for joining us today. In fiscal 2021, we are proud to have delivered a strong balance of growth and profitability, achieving a non-GAAP operating margin of 15%, up significantly from 1% a year ago. We also exceeded our 25% commitment for revenue growth plus free cash flow margin, delivering 26.3%, a strong improvement from the 13.4%, we recorded a year ago.

[Operator:]

Thank you. Your first question comes from the line of Phil Winslow from Wells Fargo. Your line is open.

[Phil Winslow:]

Hey guys, thanks for taking my question and congrats on a strong close to the year. Just wanted to focus in on Slide 17 and 28 that’s attach of Shield and Relay and Suites, but also the multi-product contribution. Obviously, a big step function up in those metrics this year. When you think about the guidance for this coming year, how do you think about the ability to continue to drive those percentages higher, but also to potentially just acquire net new customers? Because I didn’t notice your comment about you’re growing the sales force. I believe it was double digit. So just kind of help us through the growth algorithm, increase in go-to-market capacity relative to attach a new product.

[Dylan Smith:]

Yes. So I’d say that we do feel very confident given the consistent trajectory we’ve seen in higher attach rates for newer products as well as Suites. So all of our Suites offering Box Relay and Box Shield’s delivered record attach rates in the fourth quarter. As I think we’ve now had enough time in the market and have really kind of built our go-to-market initiatives and the way that we communicate our value to customers to be more oriented around these much broader deployments that leverage these capabilities. So we do feel very confident in continuing to evolve more and more of our customers adopting these add-on products and things that certainly at least kind of stabilizing, if not improving the attach rates we demonstrated in Q4 is what we’d expect to see in the coming year. To kind of frame up what that means from a business model point of view. We now have 59% of our revenue attributable to customers who have adopted at least one of our add-on products versus 52% a year ago. So it’s definitely showing up in the overall kind of sophistication of what our typical customer is using Box for. And then as it relates to growth going forward, you mentioned on the productivity side, we are expecting based on the strong productivity trends that we’ve been seeing especially over the back half of the year, we do expect to grow our sales force in the low teens with a continued focus on our higher performing regions and geographies that have higher sales force productivity. And at the same time the sales force and the things we’ve done over the course of this past year had been ramping really nicely. So we also have a greater percentage of our sales force that is fully ramped versus where we were entering this past year. So overall feeling really good about both the underlying product trends, as well as the capacity that we have to deliver against our growth targets for next year.

[Phil Winslow:]

Got it. And then just more of a strategic follow-up for Aaron, over the past year, call it 90 days or so we’ve seen a lot of changes on the call it the communication side of the content, collaboration and communications market with – for example, the announced acquisition of Slack by Salesforce. Curious what customers are saying to you if there’s a belief that there’s increased call it, permanent fragmentation at the communications layer. What that means for the call it the content layer of that Slack and Box’s position.

[Aaron Levie:]

Thanks, Phil. Yes. This is exactly what we’re seeing, where as there are more applications that enterprises are going to be deploying, whether those are communication applications or collaboration applications or business process applications, the more heterogeneity in those tools, the more you need a central independent neutral content platform or content clouds to manage the content across all of those different ecosystems. And so with Slack pairing up with Salesforce with obviously the success and growth of Microsoft Teams with other major technologies like ServiceNow and WebEx and Zoom and other platforms these all bolster our position as being that neutral content cloud that can connect to all the different applications that our customers have. And we’re seeing that show up day in and day out in our customer conversations where we’ll go to an enterprise, while there will be a lot of maybe Microsoft in that environment or Google in that environment or Salesforce in that environment. The fact that those customers might have three or five or 10 other cloud platforms that employees are working from that increases the need for having a central content cloud that connects all of those tools.

[Phil Winslow:]

Great. Thank you very much.

[Operator:]

Your next question comes from the line of Brian Peterson from Raymond James. Your line is open.

[Kevin Ruth:]

Hey, thanks guys. Kevin here on for Brian. Wanted to ask on Box Shuttle. Can you help us frame how to think about new business leads or seat expansions that you think potentially don’t materialize due to complexity or friction surrounding the onboarding process? And how do you see that product playing a role in your funnel of opportunities across the enterprise segment?

[Aaron Levie:]

Yes. Thanks, Kevin. So I think, for the most part, we’re not held back on sort of the volume of opportunities that we have due to data migration, because we have had a strong partner ecosystem that we use for data migration services. However, there’s a large number of enterprise environments where we haven’t necessarily captured all the use cases that that customer has. So we might come in and certain departments will use Box for content management and collaboration may be in the sales team or in the supply chain or for client onboarding, but they’ll still be legacy SharePoint sites or Documentum environment that that enterprise has. And so with the new Box Shuttle, we’re going to be able to now take the momentum that we have with existing customers and help them actually migrate more of their data, more of their context into Box, which ultimately is going to lead to either more seats, more API volume and then ultimately greater stickiness over time. So we see this as another significant lever to help our customers just continue to complete the full migration into having one single content cloud that is modern, secure and drives us this new level of productivity. So we think this is going to be very, very important for our continued expansion within our customer base.

[Kevin Ruth:]

Got it. That’s helpful. And then just quick follow-up I know you mentioned the high teens billings expectations for Q1. Just curious if you could talk through some of the drivers that you see driving that acceleration?

[Aaron Levie:]

Yes. So the primary driver that relates to the full year commentary around billings coming in slightly ahead – billings growth coming in slightly ahead and revenue growth is really around a lot of the underlying momentum that we’re seeing in the business. As mentioned and as always, we do see some variability quarter-to-quarter just due to things like when certain large deals renew. If we see early renewals as well as payment durations, but overall nothing unusual going on either in Q1 or throughout the course of the year and more a function of the strength we expect to see in the quarter as well as some of those dynamics around just the timing of some of the larger renewals.

[Kevin Ruth:]

Okay. Thanks guys.

[Operator:]

Your next question comes from the line of Josh Baer from Morgan Stanley. Your line is open.

[Josh Baer:]

Thanks for the question. Wanted to ask one on capital allocation, and I guess, M&A and free cash flow in there too. But basically you’ve operated with $200 million give or take in cash on the balance sheet for at least four years. And now that’s inflecting and you’re generating hundreds of millions in free cash flow. So I was hoping you could review your capital allocation strategy. Obviously, we’ve seen recent M&A, in e-signature solution but just wanted your updated thinking around potential for more M&A or anything else to consider around capital allocation.

[Aaron Levie:]

Sure. So going back to the convertible debt offering, when we executed that, as we saw it as a very opportunistic time to bolster our balance sheet through that offering, given the market environment and terms. So we’re able to achieve a combination of zero percent coupon rate with no covenants as a flexible way to fund our future needs that are relatively low costs. As mentioned, we are seeing a number of attractive tuck-in M&A opportunities to deliver more value to our customers by accelerating the innovation in our product roadmap. And the acquisition of SignRequest is a great example of that, which will become the foundation for our Box Sign launched this summer. And then anything we do acquire will have to be a logical fit with the business that doesn’t disrupt our targets for revenue growth or operating margin expansion. And more broadly, we really look at using our capital to continue to fuel growth and capture even more of the market opportunity in front of us. And we look at our capital allocation strategy through the lens of what will deliver the most value to our shareholders. So there are certain things that we evaluate like a stock repurchase program, and certainly one of the actions that we regularly look at as part of this. But more, I would say just the overall orientation is around going after the market opportunity and delivering shareholder value.

[Josh Baer:]

Great. That’s helpful. And if I could just ask, you mentioned a couple of times around SMB stabilization, maybe improvement, looking ahead, you could just go a level deeper. Like, what are you seeing in the SMB customer base? Should we expect more new customers? Is this an improvement in spend from existing customers? Thank you.

[Aaron Levie:]

Sure. So what we saw in our SMB business in the middle part of the year post-COVID did see a decrease in the demand levels and the bookings performance. In that middle part of the year Q2 was really the low point. We saw the beginnings of recovery and pipeline building in Q3. And then that resulted in a strong Q4 performance with the bookings in our SMB business up about 15% year-on-year. And those trends that we saw in Q4 have really continued. And there isn’t really anything different about the mix shift of new customers versus customer expansion. We’ve seen both of those components really bounced back to really kind of healthy levels and a very different type of volume of demand versus what we saw in the middle part of the year.

[Josh Baer:]

Great. Thanks.

[Operator:]

Your next question comes from the line of Ittai Kidron from Oppenheimer. Your line is open.

[Ittai Kidron:]

Thanks. Nice quarter guys. Aaron, maybe you can talk about, when you look at your fiscal 2022, the growth that you’ve guided for fiscal 2022 is pretty much on par as fiscal 2021. I’m kind of wondering if you’re exiting the year on such good strong momentum, and it looks like you’re going back to a hiring point nicely on the quarter base. Why shouldn’t we see a better performance there? And then also, maybe you could – Aaron or Dylan, maybe you could talk about the RPO, you talked about 17% of year-over-year. Is there a way you can give us the growth rate duration adjusted and what that would have been. Thanks.

[Aaron Levie:]

Yes. Thanks, Ittai. So great question. Obviously, we are focused on driving a strong balance between growth and profitability going forward, and we’ve guided to or provide targets for that long-term growth rate of 12% to 16% by FY2024. And I think as we looked at last year, we did see some impact on our professional services business. This is really our consulting offering where we help customers with deployments and expansion. And because a lot of our bookings are coming from existing customers, driving seat expansion or add-on product expansion, in some cases, less need for that professional services. And so some of that flows through in terms of recognizable revenue in professional services coming into FY2022. And then we also saw obviously, between the SMB business that Dylan just talked about and some of our segments you saw, some impacts to that, which obviously was an impact in FY2022 – FY2021 that flows into FY2022. So we have – we still have some of that impact flowing into the FY2022 numbers. However, as you just called out with the momentum we're seeing in Q4, the fact that we're seeing really, really healthy expansion of suites Box Shield now in nearly 60% of our $100,000 plus deals, really, really healthy adoption rates of those products right now. We do believe that there's a lot more momentum that we're going to go with the capture, which is why we want to make sure that we're again, driving that, that balance of growth and profitability going forward. And then certainly when you layer on things like Box Sign, where it's the number one kind of new most requested product from our customers. We see a lot of momentum possible throughout this year. So we want to be prudent on our guidance and make sure that we're continuing to drive that balance and growth and profitability, but we're excited to see and keep executing throughout this year.

[Dylan Smith:]

And to answer the question about the RPO dynamics, so as mentioned we have seen a lengthening in contract durations because of just the volume of longer-term strategic deals that we're signing with our customers. And so now the average contract duration across our business is up and now about 19 months versus about 18 months a year ago. So the impacts that that's more on the backlog component of RPO and the total impact RPO because of that dynamic specifically is in the low-single digit range in terms of the percentage impact to the 17% RPO growth.

[Ittai Kidron:]

Great. That's great. Aaron maybe it's just as a follow-up, in your prepared remarks, you talked about how you see a 7x potential of upselling within your existing base. And then you've talked about that hiring the quarter based individuals and targeting new regions customer success segment. It feels like – it would be fair to say that there is you look at fiscal 2022, you're taking perhaps a little bit more of a balanced approach between going after new business versus expansion versus past year, which was very expansion focused.

[Aaron Levie:]

I think certainly incrementally with our current product portfolio and some of the updates are things like Box Sign, I think incrementally, we are continue to drive more differentiation and improvement on being able to attract new logos onto the platform. But equally, with that 7x speed opportunity and with the product portfolio we have, we do want to make sure that we go in and go and support all of our existing customers and expand them as much as possible. And so some of the go-to-market areas that we want to continue to support, those will even go into making sure that we can drive growth within the current install base. So some of those investments will help us go deeper within today's install base, not just go out and expand the new logos.

[Ittai Kidron:]

Very good. Good luck, guys.

[Aaron Levie:]

Thank you.

[Dylan Smith:]

Thanks.

[Operator:]

Your next question comes from the line of Steve Enders from KeyBanc Capital Markets. Your line is open.

[Steve Enders:]

Hi, great. Thanks for taking the question. I just wanted to check, it sound like you had pretty solid performance in new customer bookings in the quarter. Just wanted to get a sense of how you're thinking about that strong performance there. And I guess kind of expectations going forward when it comes to new customers onboarding.

[Dylan Smith:]

Sure. So I'm very pleased with the performance there and think really comes down to a couple of drivers. The first of which is just as it relates to the overall improvement that I mentioned earlier on in the SMB business, while the ratio of new customer versus customer expansion wasn't too different from what we typically see. We do see a stronger mix and a greater contribution from net new customers in that part of the business versus the enterprise, which is a little bit more concentrated in customer expansion. And so as the SMB performance really continued that was part of the reason that we saw such strong net new customer bookings growth. And then the other driver is a really strong quarter and outcome for our Japan business signing up some pretty key new customers on the Box. So those are the two biggest kind of components that drove the net new customer growth.

[Steve Enders:]

Okay, great. Thanks. And then on – you talked a little bit about kind of the new Box Sign product that you're rolling out and just kind of wondering how you're thinking about kind of the evolving strategy going forward with the Box Content Cloud, and what are kind of the incremental opportunities that that strategy could open up for you?

[Aaron Levie:]

Yes, thanks. So the way that we've been driving our multi-year strategy, and we laid this out many years ago, as we went to go and drive the cloud content management market and category broadly was really being able to power the complete workflow or lifecycle of content within a single – multi-tenant cloud platform. That's been the journey that we've been on as a platform now for well over a decade. And as we look at that lifecycle for where content travels through business processes and needs to be secured and classified, and then ultimately govern, certainly over the past year, we've seen all new use cases that have increased in importance, so massive increase in digital transactions around content. So whether that's a contract management workflow or employee or compliance workflow, we know that e-signatures have really just propelled in growth in every large, any enterprise around the world. And so we recognize that, okay, we’ve really had to accelerate having e-signature capabilities, natively built into the platform and really provided to the market in a very disruptive compelling way. So that was obviously drove our acceleration into the e-signature market. Conversely, well, we see all new use cases around being able to do new content workflows around content publishing, things like digital asset management and contract collaboration and sales enablement. So there's all new use cases that help us go deeper in every key vertical and line of business from a content management standpoint that we're very excited to be releasing throughout the year. So we want to power that complete life cycle of content in a single cloud platform. And that's what we are driving with our content cloud vision, and you'll see continued organic innovation on that front. And then of course, when appropriate areas where we can accelerate that innovation with what we did with the SignRequest tuck-in. So that's how we're going to be driving growth going forward.

[Steve Enders:]

Okay, great. Thank you.

[Operator:]

Your next question comes from the line of Rishi Jaluria from D.A. Davidson. Your line is open.

[Philip Rigby:]

Hey, this is Philip Rigby on for Rishi Jaluria. Thanks for taking the question. I want to get a bit more color on the customer wins you highlighted like the Japanese manufacturer and the biopharma. Anything you can tell us about what drove the displacements or wins there. I appreciate the commentary about the — you brought integrations, but just interested to hear any incremental thoughts on those?

[Aaron Levie:]

Yes, thanks. So we are — I think, as we highlighted, certainly in the past couple analyst earnings calls, at the start of the year, maybe the first half of the year, we had a pretty robust set of conversations around just kind of secure remote work within our customer base. So companies calling us saying we need more licenses at Box, because we have to enable work from anywhere which was obviously a great momentum we saw of course, there were equal headwinds in some parts of the segments that we serve, especially SMB and in other parts of the business. As we came into the second half, we really kind of – we saw very noticeable shift in the kinds of conversations we’re having with customers where, there was no longer just around remote work enablement but really around the long-term digital transformation initiatives. So in the case of various customers in life sciences, really starting to think about revamping all operations around clinical drug trials and working with the FDA and collaborating with CRO partners or global manufacturers and CPG companies that need to be able to securely collaborate all around the globe with all of their partners. And in all of these cases, there is a very consistent trend of the need for an extreme amount of data security. So that’s where Box Shield comes in. The ability to have a single platform for the content workflows and collaboration that we’re obviously our core platform and Relay come into play. And then being able to have integrations with all of their IT stack, whether that’s Microsoft Teams or Slack or Zoom or other major tools like WebEx that they’re using, and so when we bring in that full value proposition of data security, collaboration and workflow and an open platform, that’s really what led to the acceleration of a large number of deals in Q4, including the ones that you highlighted. But frankly I think these are trends that we’re seeing across every segment, every industry and all around the world right now.

[Philip Rigby:]

Very helpful. Congrats on the quarter.

[Aaron Levie:]

Thank you.

[Dylan Smith:]

Thanks.

[Operator:]

Your next question comes from the line of Mark Murphy from JPMorgan. Your line is open.

[Mark Murphy:]

Yes, thank you very much. Dylan, I think you alluded to this, but I’m just wondering to what extent you expect to see a structurally different cost structure on the real estate side and then the T&E expense profile post pandemic? In other words, just interested in how you’re envisioning your own company’s workforce location. And then the trend in business travel for this year, maybe into next year also?

[Dylan Smith:]

Yes. So we would say that certainly for the coming year, the current year, based on the timing of when we expect to return to offices and just some of the other dynamics of COVID kind of gradually abating, we expect to stay at the kind of levels we’ve seen over the last few quarters for the first half of the year. Going forward, once we do return to an office based environments, as mentioned we expect some of these expenses to return. But I think based on some of the success and ways that we’ve been able to move certain types of conversations, demand generation, things we might have needed to travel for had customer-based events for online, even steady state, we do expect that to be more efficient. So that combined with the overall shift that we’ve talked about in location strategy is really what’s driving a lot of that kind of continued benefits – those continued benefits in our ability to remain at pre-COVID levels versus anything dramatically different from a structural standpoint.

[Mark Murphy:]

Okay, understood. The other question I had for you is, I think in the past you’ve had relatively little FX impact, but just given some of the recent volatility in rates. Can you just clarify if, was there any material FX impact one way or the other on revenue or deferred revenue in fiscal Q4 or are those all the same numbers in constant currency terms. And while I’m at it, I guess I’d ask the same, the short-term RPO, I think that grew 10% and is that the kind of – are those all kind of the same numbers in constant currency?

[Dylan Smith:]

They are very similar. So as it relates to the Q4 outcome, there wasn’t impact a tailwinds on billings and then deferred revenue kind of low-single digit millions and then really an immaterial impact on revenue and expenses. And so those are very close into the overall growth rates on the billing side about a less than 1% impact and even less pronounced when you look at items like deferred revenue or RPO. And all of those are related to the same dynamics that you mentioned.

[Mark Murphy:]

Okay, very good. Thank you.

[Operator:]

Your next question comes from the line of Chad Bennett from Craig-Hallum. Your line is open.

[Chad Bennett:]

Great, thanks for taking my questions. So just on the billings commentary for the current quarter. I think you spoke about high teens. I mean, I don’t want to hold you to anything, but just looking forward from the current quarter, including the current quarter, you really have pretty favorable comps on the billing side for this entire year. Is there anything or puts and takes, mainly puts, I guess, that would decelerate that billings growth rate in the last three quarters of the year?

[Dylan Smith:]

No there really isn’t anything unusual that we anticipate. I mean, again, and feel really confident in the kind of commentary around FY2022 for that billings growth to exceed our revenue growth. And again from quarter-to-quarter, we do see our billings outcome occasionally impacted by the timing of large customer renewals and things like that, but nothing unusual that would be creating sort of strange compares for the coming year. We expect the underlying drivers to remain pretty consistent what we saw in FY2021. And so really the higher performance is more driven by the underlying business momentum that we expect to see.

[Chad Bennett:]

Okay and then just trying to – at least big picture wise put the pieces together on the guide for the year about 10% growth, which is kind of similar growth to what you saw this past year. You guys talked about a $55 billion TAM. You talk about being a pretty significant player in digital transformation and cloud acceleration. You’re still a sub-billion dollar revenue company. The software place on these kind of secular trends that are very robust right now from a spend standpoint aren’t growing at 10%, I guess, to put it bluntly, and even your target growth rate of 12% to 14%, if you took the midpoint, you’d argue that’s fairly low. So it’s been – I love the color on the attach rates in Box Shield and Suites and Relay and so forth. I mean, they’re all up into the right, but our net expansion continues to decline and even if you expected a couple more points on net expansion, it still seems that somethings – I’m missing something, or maybe there is something kind of in the go-to-market that – that’s not quite clicking yet. Can you provide any color there?

[Aaron Levie:]

Yes. So first of all, I mean certainly great question. I think if you look at the broader market in content management and document management and collaboration and data security around content, I think our growth rate would certainly be the highest, if not one of the highest growth rates of the category. And so it’s a very large TAM, but certainly one that has to be migrated from on-premise systems and legacy systems into the cloud. So that’s certainly relevant nuance, which is we are really going out and disrupting the broader market. And by doing so, certainly driving one of the highest growth rates, again, it’s not the large growth rate from an enterprise platform standpoint in this segment. So I would just kind of factor that into as you think about this, it’s very different from the kind of a net new market that many, many other cloud players or SaaS platforms are going after, where those markets are growing from a smaller base because of the influx of just more of the cloud and SaaS adoption. And then obviously, we are working aggressively to make sure that we continue to expand our product portfolio to drive these higher growth rates. We want to be prudent in our long-term model and not get ahead of ourselves and kind of provide targets that gets too far ahead of where we’re growing today, but we also want to be ambitious and make sure that we’re expanding our product portfolio and really helping our customers have that single Content Cloud to manage in the full lifecycle of their content. And that’s I think what drives that principle of the 16% growth number in the next couple of years. And we’ll certainly keep the market up to date as we drive further growth on that front and see the results show up, but ultimately, clearly want to be prudent at this stage.

[Dylan Smith:]

Yes. And then as it relates to FY2022 to build on that, as Aaron said we do remain prudent as we expect to see some COVID related headwinds in this – continue in this year for example continued pressure in our professional services business in revenue. And then as the growth really reflects the prior 12 months of business performance as the momentum that we’re seeing in our business flow due to revenue. We do expect to see a slight upward trend over time at the end of this year in Q4 and a higher growth rate than our Q1 guidance calls for. And then as Aaron mentioned, based on the strong foundation that we’ve been building over the past year, the momentum we’re seeing currently, we remain confident in the long-term targets that we laid out at our most recent Investor Day.

[Chad Bennett:]

Great, thanks for taking my questions.

[Operator:]

Your next question comes from the line of Brett Knoblauch from Berenberg Capital Markets. Your line is open.

[Brett Knoblauch:]

Hi guys, thanks for taking my question and congrats on the quarter. Just maybe a couple on the headcount increases. I guess first, what was the quota-carrying growth this year. And will the new hires be focused on existing expansion or kind of new customer acquisition?

[Aaron Levie:]

So – sorry, the second part of the question was just if the AEs that were hired will be focused on customer expansion versus new logos?

[Brett Knoblauch:]

Correct.

[Aaron Levie:]

Okay, so to speak of the trends, the size of our sales force was down slightly over the course of this past year, as we really look to focus our investments and resource into the regions that were performing better. We did continue to grow sales headcount there. And then going forward, if you think about that low-teens growth that we mentioned that we expect to see, it really is focused on a combination of new logos and customer expansion, pretty consistent with the ratios that we’ve been seeing in the business, particularly because as mentioned, we are going to be continuing to focus on the segments and geographies, where we see higher levels of performance. And those tend to have more mature customer bases and expansion opportunities. But the reps will be higher in those regions – we’ll be hiring those regions, certainly are going after, pretty significant new customer acquisition opportunities as well. I mentioned Japan as a highlight and that was the exact dynamic that we saw in Q4, but our sellers typically just for context, have a combination of prospects and existing customers in each of their individual territories versus an explicit or pure hunter versus formal model.

[Brett Knoblauch:]

Perfect. And then maybe just one on SignRequest, I guess, can you disclose anything there from maybe deal terms to revenue contribution to billings as well. I guess, you’ve guided for billings growth they exceed revenue growth this year. Does SignRequest have a big factor to play in that?

[Dylan Smith:]

No. So in terms of the total purchase price of SignRequest was $55 million and then in terms of the contribution, expect that to be immaterial to revenue and not to impact our bottom line commitments either. To get a sense of scale, there will be a little more than 20 SignRequest employees joining the Box team and the strategy is really to leverage this technology and team as the foundation of our Box Sign offering, and that we’re really excited about as Aaron mentioned that’s the single biggest request that our customers have had in terms of a new feature. And so really the reason we did this was in order to kind of fuel and build on those efforts as they will show up as part of Box Sign in the future and really add to the functionality and differentiation of our Suites offerings as well. But the actual financial impact of the SignRequest business is immaterial.

[Brett Knoblauch:]

And then you guys also have kind of like API with DocuSign. So is this maybe a form of coopetition that you’re going with. Or how will DocuSign and Box customers, I guess choose between if they want to use Box Sign or DocuSign?

[Aaron Levie:]

Yes. So we obviously are very open and partner-centric platform. So we remain committed to our partnerships with DocuSign with Adobe Sign and other players in the market. And any customer that chooses to use any other technology will be able to do so in a very seamless way, where there’ll be no shortage of functionality or feature that we would provide by our APIs in those partners. And in fact, we continue to make those integrations even more visible and available to our customers. At the same time, as we surveyed our customers throughout last year, we saw a tremendous amount of use cases where customers were not licensed for one of these third-party products or maybe they were only licensed in a very small subset of their employee base, where there were e-signature use cases that went beyond what they had already licensed in external services for – external service for. And so that’s really the power of Box Sign is every seat on Box is going to be able to have made an e-signature capability built directly into the product and through our APIs in our platform. So any customer that is certainly using Box broadly across their enterprise or maybe they have an ELA with Box or maybe they’re continuing to expand their use cases, Box Sign is now going to be built directly into the product and you’re going to able to make e-signature functionality available to all of those users. But we see that very powerful, but certainly we will continue to be incredibly complementary to the other products in this market as well.

[Brett Knoblauch:]

Perfect. And then maybe just one last on the paying users, I guess, how many did you add in Q4? And that will be it from me. Thanks guys.

[Aaron Levie:]

So we ended the quarter with 15.5 million paying users, up from 15.0 million last quarter.

[Brett Knoblauch:]

Perfect. Thanks guys. Appreciate it.

[Operator:]

That’s all the time we have for questions today. This concludes today’s conference call. Thank you for participating. You may now disconnect.