Good afternoon. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to the Box First Quarter Fiscal 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you. Cynthia Hiponia, you may begin your conference. Good afternoon, and welcome to Box's First Quarter Fiscal 2023 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 at 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 @Box Inc IR. On this call, we'll be making forward-looking statements including our Q2 and full year fiscal 2023 financial guidance and our expectations regarding our financial performance for fiscal 2023 and future periods, including our free cash flow, gross margin, operating margins, operating leverage, future profitability, net retention rates, unrecognized revenue, remaining performance obligations, revenue, and billing, and our expectations regarding the size of our market opportunity, our planned investments and growth strategies, our ability to achieve our long-term revenue and other operating model targets, the timing and market adoption of and benefits from our new products, pricing models, and partnerships, the impact of our acquisitions on future Box product offerings, the impact of COVID-19 pandemic on our business and operating results, and our capital allocation strategies, including M&A and potential repurchase of our common stock. 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 annual report on Form 10-K 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, May 25th, 2022, and we disclaim any obligation to update or revise them should they change or cease to be up to date. In addition, during today's call, we will 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'll find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results in our earnings press release and in the related PowerPoint presentation, which can be found on the IR page of our website. Unless otherwise indicated, all references to financial measures are on a non-GAAP basis. With that, let me hand the call over to Aaron. Thanks, Cynthia, and thank you all for joining the call today. We are off to a strong start in fiscal 2023, delivering first quarter revenue growth of 18% above our guidance and representing a fifth consecutive quarter of accelerating revenue growth. Our continuous focus on profitability resulted in non-GAAP operating margin of 21%, up 360 basis points from 17% a year ago. Because of this strong momentum, and even with the impact of FX, which Dylan will describe in more detail shortly, we are raising the midpoint of our revenue range and raising our operating margin guidance and EPS guidance for the full fiscal year. In Q1, we continued to execute on our product roadmap as we address a $74 billion market opportunity. We announced Box Canvas, our native virtual whiteboarding and visual collaboration solution, while also launching significant product enhancements with Box Sign, workflow with Box Relay, and security and compliance with Box Shield. We deepened integrations across several of our key technology partners, and we expanded our customer relationships while continuing to add new customer logos. The success of our platform strategy is shown in our strong customer metrics as customers are leveraging our Content Cloud platform to transform their businesses and power new ways of working. In the first quarter, our net retention rate was 111%, up from 103% in the prior year, driven by strong customer expansion rates. For our large deals over $100,000, we had 60 new deals, and we had a 73% attach rate of suites, up from a 49% attach rate in Q1 of fiscal 2022. We continue to see healthy attach rates in the U.S. and EMEA, with improvements of our attach rates in Japan. Our strong Q1 fiscal results and customer metrics underscore that our growth strategy is working and that we are aligned to the key trends that are driving the future of work. Companies today are dealing with a more and more distributed and hybrid workplace as they implement the digital transformation of their business processes and face increasing security challenges across their organization. Our Content Cloud addresses these trends by building out capabilities to power the full life cycle of content in a single platform. As we continue to double down on these product capabilities and investments, we will add more value to our customers and expand Box's TAM. In Q1, we announced a major new element of our Content Cloud with Box Canvas, allowing us to enter an additional fast-growing market with our platform. With the prevalence of remote and hybrid work now a permanent part of nearly every business, the ability to seamlessly collaborate on any type of content is critical. Over the past couple of years, we've seen a huge increase in companies looking to collaborate on visual content, from product design, storyboards, and project plans to flowcharts, diagrams, and more. Box Canvas is an intuitive visual collaboration and whiteboarding experience that powers freeform collaboration while leveraging all of the strength of the security, governance, and compliance built directly into Box. With Box Canvas officially launching later this year, it will be included across all of our product plans, adding even more value and enabling our customers to benefit from Box in new use cases across their organizations. With products like Box Canvas, Box Sign, and Box Notes delivered as included capabilities in Box's core subscriptions and bundles, customers benefit from getting new value from Box instantly. Especially as companies look to consolidate IT spend from various point solutions, Box remains in a strong position to help retire disparate e-signature technologies, collaboration tools, enterprise content management systems, and much more. It's a win-win that drives ROI for our customers, as well as providing additional upside as customers move up to higher-tier plans for more features. Since our launch of Box Sign this fall, we have announced major new enhanced capabilities, integrations, and developer tools to power even more advanced signature-based processes, helping customers move more of their transactions to the Content Cloud. We are pleased with the momentum we are seeing in customer adoption and use of Box Sign. First quarter customers include a global legal services provider that moved to Box with a six-figure deal in order to provide its network of lawyers who work on the most sensitive matters with secure internal and external content collaboration, along with Box Sign for secure and affordable e-signature options for boilerplate agreements. A U.S.-based real estate investment trust purchased Box in Q1 and deployed Box Sign across its organization to support the signing and collaboration around commercial leases. Finally, a global biopharma company who has been a Box customer since 2018 moved to Enterprise Plus in Q1 with plans to use Box Sign, which will be critical as the company continues to scale and they release new drugs to market. Box's security capabilities also remain a critical driver of why customers choose our Content Cloud. Data security, compliance, and privacy remain more important than ever. In Q1, we launched new capabilities for Box Shield, our advanced security solution for protecting content in the cloud, including the ability to apply malware deep scans to Microsoft Office files and adding automatic watermarking to classified documents. Throughout this year, we will continue to extend our leading security, compliance, and data governance capabilities. Finally, the ability to integrate deeply across the SaaS landscape is an integral part of our product strategy. We recently announced a deepened integration with Zoom, with the launch of the Box app for Zoom chat channels to make it even easier for users to work seamlessly together across the two platforms. In Q1, we also announced the all-new Box App Center, a destination for users, admins, and developers to easily discover and access the more than 1,500 applications that integrate with Box, highlighting the power of Box's deep partnerships with Microsoft, Google, Slack, Zoom, Webex, ServiceNow, IBM, and many other major technologies. As we look forward in FY 2023, we believe it will be Box's biggest innovation year ever. We will continue to focus on our three core differentiators of frictionless security and compliance, seamless collaboration and workflow, and an open platform that's integrated into every application. We'll continue to build products that reinforce each other, powering the full life cycle of content and empowering our customers to save money by retiring other tools. Above all, we will ensure that our customers derive more and more value from Box as they move more of their data onto our platform. This is a virtuous flywheel that drives our business model, and we're only in the early innings of what's possible. Turning to go-to-market, as we discussed during our Analyst Day in late March, our strength and business momentum is a result of a number of initiatives that we have undertaken to scale our land and expand go-to-market motion. These have included optimized pricing and packaging, with our latest multi-product offering, Enterprise Plus. In Q1, Enterprise Plus accounted for more than 80% of our multi-product suite deals, a remarkable achievement since the launch of E Plus in July of last year. A much quicker ramp than we saw when we launched our first suites. Our Q1 customer expansions and new wins with Enterprise Plus include an agency of the United Nations that purchased Enterprise Plus and KeySafe as they look to use Box with other cloud apps, including Salesforce, to build a modern digital platform for the approval of new vaccines and medicines from across the globe. Their process now is currently carried out via email, paper, USB sticks, and DVDs. A leading biotech company that invents life-transforming medicines for people with serious diseases moved to Box in a six-figure Enterprise Plus deal. This new customer will be using Box for regulated content and high-value use cases. The fact that Box supports GxP compliance and that our offering provides a better experience to both internal and external parties as they work together on clinical trials was critical for the selection of Box with the decision-makers at this company. Finally, a major automotive company purchased Box with a seven-figure Enterprise Plus deal, enabling them to eliminate on-premises file servers and solve key security issues. By replacing file servers with Box, they will centralize content management and simplify secure collaboration internally and externally with partners. Our strategy aims to bring the full power of the Content Cloud to our customers, and we know that when a customer adopts our multi-product offerings, we see greater total account value, higher net retention, higher gross margin, and a more efficient sales process. We are also continuing to double down on all of our efforts around deployment, adoption, and truly helping our customers transform with Box. As such, in Q1, we launched our new Box Consulting portfolio, a completely redesigned program that makes it easier to position, sell, and deliver these critical customer success services to empower any organization to achieve their Content Cloud goals. In summary, our strong first quarter results and the continued momentum we are seeing in our business is the direct result of the execution and focus of the team at Box. Despite macro trends and currency impacts, we have continued to execute on our Content Cloud platform to ensure that we will continue to drive further annual revenue acceleration. At the same time, we remain steadfastly committed to expanding our operating margin by focusing on the highest ROI initiatives across the business, scaling in lower cost locations, improving gross margin, and more. The future of work is here, and the Content Cloud platform has never been better positioned to capitalize on these trends of hybrid, distributed, and digital-first work. With that, I'll hand it over to Dylan. Thanks, Aaron. Good afternoon, everyone, and thank you for joining us. In fiscal 2023, we have three key financial objectives. Accelerating year-over-year revenue growth, expanding operating margins through our focus on operational excellence, and prudently allocating capital to optimize shareholder returns. We had a strong start to FY 2023, delivering against all three of these objectives. As a result, we are raising the midpoint of our revenue guidance and raising our operating margin guidance and EPS guidance for the full fiscal year. In Q1, we delivered revenue of $238 million, up 18% year-over-year, a fifth consecutive quarter of accelerating growth, and above the high end of our guidance of $235 million. This outperformance was driven by strong deal pacing and higher than expected non-recurring revenue. Our Q1 revenue growth rate includes an incremental impact of - 1 percentage point from FX versus our initial expectations. We continue to see strong demand for our Content Cloud platform. In Q1, we closed 60 $100,000+ deals, of which 73% were suites deals. As our customers are increasingly adopting products with more advanced capabilities, roughly 37% of our revenue is now attributable to customers who have purchased suites, an exceptional 12 percentage point increase from 25% a year ago. We ended Q1 with remaining performance obligations, or RPO, of $1.0 billion, a 16% year-over-year increase. Our RPO growth was negatively impacted by 6 percentage points from FX. We expect to recognize more than 60% of our RPO over the next 12 months. Q1 billings of $172 million grew 8% year-over-year. Our billings growth was negatively impacted by an incremental 4 percentage points versus our initial expectations due to currency headwinds. Our net retention rate at the end of Q1 was 111%, up 800 basis points from 103% in the prior year. We continue to see strong customer expansion and a stable annualized full turn rate of 4%. We still expect our net retention rate to remain roughly consistent throughout FY 2023. Gross margin came in at 76.3%, up 330 basis points from 73.0% a year ago. Q1 gross profit of $182 million was up 23% year-over-year, exceeding our revenue growth rate by a full 500 basis points. We are delivering material profitability leverage via our public cloud migration strategy, and we remain focused on unlocking additional leverage to improve our long-term gross margin profile. Q1 operating income increased 43% year-over-year to $49 million, and our 20.6% operating margin was up 360 basis points from the 17.0% we recorded a year ago. We delivered $0.23 of diluted non-GAAP EPS in Q1, up from $0.18 a year ago. Q1 non-GAAP EPS includes a negative impact of $0.03 from currency headwinds. I'll now turn to our cash flow and balance sheet. In Q1, we delivered cash flow from operations of $108 million, up 14% from the year ago period. We also generated free cash flow of $91 million, a year-over-year improvement of 20%. We generated record cash flow from operations and free cash flow in Q1, driven by very strong collections, including several large payments that we had expected to collect in Q2. Capital lease payments, which we include in our free cash flow calculation, were $12 million, down from $13 million in Q1 of last year. For the full year of FY 2023, we continue to expect CapEx and capital lease payments combined to be roughly 5% of revenue in Q2 and roughly 5% of revenue for the full year of FY 2023, as compared to 6% of revenue last year. Let's now turn to our capital allocation strategy. We ended the quarter with $520 million in cash equivalents, restricted cash, and short-term investments. As we've been doing, we expect to use our strong balance sheet and our increasing free cash flow generation to execute a disciplined M&A strategy to enhance and accelerate our product roadmap while also generating shareholder returns via additional stock repurchases. In Q1, we repurchased 4.2 million shares for approximately $110 million. As of the end of Q1, we had approximately $148 million of remaining buyback capacity, and we remain committed to opportunistically returning capital to our shareholders. With that, I would like to turn to our guidance for Q2 and fiscal 2023. As you know, since our prior earnings announcements on March 2nd, 2022, the U.S. dollar has strengthened versus the currencies in which Box transacts our international business, resulting in a larger than expected FX headwind to both Q2 and the full year of FY 2023. As a reminder, approximately one-third of our revenue is generated outside of the U.S. The following guidance reflects the strength and momentum of our underlying business and also includes the impact of any expected FX headwinds. For the second quarter of fiscal 2023, we anticipate revenue of $244 million-$246 million, representing 15% year-over-year growth at the high end of this range. We expect our non-GAAP operating margin to be approximately 22%, representing a 130 basis point improvement year-over-year. We expect our non-GAAP EPS to be in the range of $0.27-$0.28 and GAAP EPS to be in the range of -$0.02 to -$0.01 on approximately 152 million diluted shares and 146 million basic shares, respectively. For the full fiscal year ending January 31st, 2023, as a result of our strong Q1 results and despite the impact of FX headwinds, we are raising the midpoint of our revenue range and raising our operating margin guidance and EPS guidance for the full fiscal year. We now expect FY 2023 revenue to be in the range of $992 million-$996 million, up 14% year-over-year at the high end of this range. Including the impact from FX headwinds we anticipated when we gave our initial FY 2023 guidance, we now estimate the full currency headwinds to FY 2023 revenue growth to be approximately 3 percentage points. We are prudently focusing our investments on compelling long-term growth opportunities, and our disciplined cost savings initiatives are generating efficiencies across the business. As a result, we are raising our non-GAAP operating margin guidance to be approximately 22.5%, representing a 270 basis point improvement from last year's result of 19.8% and an improvement over our previous guidance of roughly 22%. We are raising our FY 2023 non-GAAP EPS to be in the range of $1.11-$1.15 on approximately 154 million diluted shares and up from $0.85 in the prior year. Our GAAP EPS is expected to be in the range of -$0.05 to -$0.01 on approximately 147 million shares. Our FY 2023 GAAP and non-GAAP EPS guidance includes an expected incremental impact from FX of approximately $0.08 versus our initial FY 2023 guidance. For the full year of FY 2023, we continue to expect billings growth to be roughly in line with revenue growth, with expected variability on quarterly growth rates due to the dynamics of prior year comparisons and the timing of large customer renewals. Directionally, while billings growth rates are expected to be in the mid-single digit range in Q2, we expect our billings growth rate to exceed our revenue growth rate in the second half of the year. We estimate the currency headwinds to our FY 2023 billings growth rate to be approximately 4 percentage points. We continue to expect our FY 2023 RPO growth to exceed our anticipated full year revenue and billings growth rates. Finally, we continue to expect our FY 2023 revenue growth rate, combined with our FY 2023 free cash flow margin to be at least 37%, a 400 basis point improvement from last year's outcome of 33%. In summary, the strong execution and business momentum we saw last year continued in Q1 as we delivered accelerating revenue growth while improving profitability year-over-year. In addition, we remain dedicated to a shareholder-friendly capital allocation strategy that positions us for strong execution in the years ahead as we build on our Content Cloud leadership position. With that, Aaron and I would be happy to take your questions. Operator? Thank you. At this time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad. Your first question today comes from the line of Jason Ader with William Blair. Your line is now open. Yeah. Thank you, operator. Hi, guys. First is how are you feeling about the current demand environment? Are you baking in any kind of a moderation in the demand environment? How do you think you would fare if we do enter some type of a macro downturn, especially given your seat-based model? Sure. Yeah. I'll take that. Hey, Jason, this is Aaron. Overall demand remains healthy, and we've got pretty good visibility into the pipeline, and are seeing kind of strong signal from the pipeline side and just current customer activity. We believe we're well positioned for the environment. You know, if we think about businesses that are looking to be more efficient, automate more business processes, continue to drive digital operations, or even consolidate and retire expenses, you know, we think our platform is well positioned to capture more of the spend that would have gone into various point solutions across e-signature, workflow, collaboration, security and compliance. I think the combination of just how we are positioned in terms of the macro tailwinds on digital transformation and hybrid work, as well as our ability to consolidate expenses into a single platform model. I think positions us well. Okay, great. One quick follow-up. Some investors have asked me or been a bit worried about the fact that current growth could be driven more by just upsell to your base with Enterprise Plus. Once you work through some of that low-hanging fruit, growth could get harder. How do you respond to that, to that thesis? Yeah. Maybe I'll let Dylan just comment on kind of where we're at in that transition overall. Overall, if we look at the, you know, 100,000+ logos that we have, you know, we think there's significant upside and available upsell potential within the customer base by both moving customers from, you know, existing plans into E Plus. Then frankly, the seat expansion, which again is not really driven by more headcount within our customers, it's much more driven by more use cases for us to be able to drive value for them. Between seat expansion, moving customers into Enterprise Plus, as well as our monetizable elements of our platform APIs, we think that that is, you know, provides very, very strong upside from the current customer base. At the same time, we're continuing to bring on new logos. We've had great wins even in Q1 of you know customers that are you know really committed to bringing in a Content Cloud platform in their organization to drive digital transformation across their content use cases. Yeah. This is Dylan. Just to build on that and quantify the continued expansion opportunity that we have. As a reminder, if you look at just purely seats in our current customers today, we have roughly 7x seat expansion opportunity, looking at the number of paid seats they have today versus the total knowledge worker population. Then on top of that, while we have seen very strong momentum with our suite sales, and that now makes up 37% of our revenue versus 25% a year ago, over time, we expect the significant majority of our customers to be on suite. From both a seat expansion point of view and a continued cross-sell opportunity, in addition to the new logos we're bringing on, we feel very good about the growth that we have ahead within our customer base. All right. Good luck. Thanks, guys. Thanks, Jason. Your next question comes from the line of Brian Peterson with Raymond James. Your line is now open. Hi, gentlemen. Thanks for taking the question. Aaron, one of the comments you made was about some of your customers looking to consolidate their IT footprint. You know, I know you're expanding the use cases and the value of the platform, but have you seen that increase in terms of your customer conversations in terms of them, you know, maybe looking to retire more legacy solutions? Has that changed maybe in the last two quarters? Yeah. I think, you know, we've been dealing with the general trend of customers looking to re-platform their content management environment now for the past few years. That's things like, you know, Documentum and Legacy SharePoint environments and so on. More on network file shares, you know, moving those to the cloud. That's why we have Box Shuttle to help with that data migration. We've been, you know, really focused on migrating that to the cloud, you know, quite a bit. I think with the addition of e-signature with Box Sign and now, you know, virtual and visual collaboration with Box Canvas, it provides, you know, two new categories that customers otherwise have to independently spend money on that just provides additional value when you buy into the overall platform. You know, one example that I called out, you know, we had a sort of software biotech company that was really looking to be able to kinda get more use cases solved with Box. We ended up having a very strong champion from the finance department, ultimately drive the usage of the Box platform from a deal standpoint. It's you know, we're now, you know, seeing the addition of more sort of personas within our sales process, finding more value with our platform. It's not just the digital transformation side, but it's also how can we deliver cost savings. We've had, you know, a number of customers already with the addition of Box Canvas, which doesn't roll out even until this fall, see that as another opportunity where they can consolidate spend into Box, and get more value from our platform. I think that's gonna continue to be the case. We think that sets us well for the environment that we're, you know, clearly in from a macro standpoint. That's in addition already to the tailwinds of digital transformation, remote and hybrid work, and the cybersecurity challenges that the companies face. Good to hear. Maybe just a follow-up on the M&A environment. You know, obviously, Box Sign has gotten some really good traction. I'd be curious, you know, what do you see in terms of the M&A pipeline? Obviously, we've seen a correction here in the public markets. I'm just curious what you're seeing, maybe on the private side. Thanks, guys. Well, I think, you know, generally speaking, the private market is going to clearly go through a pretty broad scale correction as a result of that happening in the public side. I would say when you think about our M&A strategy, it's very surgical. We look for capabilities that we need to bring onto the platform to help accelerate our roadmap. We're extremely selective as it is around the kinds of technologies that we buy. You know, it's very possible that the prices come down on a relative basis. We are very, very focused on specific technologies. We're often not, you know, paying the kind of exorbitant prices that were already kind of happening in the market just as a result of our existing kind of, you know, focus on cash flow, and the balance sheet. So I think, you know, prices will come down, but it doesn't change our appetite. We're very surgical, and we'll continue to focus on just the kind of tuck-in acquisitions, as appropriate to, you know, bolster up the value for our customers. Thanks, Aaron. Your next question comes from the line of Ittai Kidron with Oppenheimer. Your line is now open. Hi, it's actually George Iwanyc. Following up on the value add that you're putting into the platform, could you give us some perspective on, you know, your pricing leverage at this point, you know, either from less discounting perspective or your ability to maybe raise prices? Yeah. I think you know philosophically as you know and kind of I think all the folks on this call know we have gone through a multi-year evolution where we had you know the single core platform of core Box and then we had individual add-on products and you know that led to some inefficiency in the sales motion. We heard from customers you know we think this is you know too slow to then adopt a lot of the value that you are building. So we moved to Suites and then ultimately you know Enterprise Plus is that super suite. We think that the value proposition we're offering customers is you buy into our platform, and you're gonna continue to get more and more innovation from us over time. You know, last year that was Box Sign. This year, that's Box Canvas. It's a lot of innovation around workflow automation. It's a lot that we're doing on the security front. You know, over time, we're able to drive more seats into the platform as one vector of upsell. We're able to kind of command higher price per seat on a like for like basis due to to your point, you know, sort of less discounting. We're able to monetize the API volume of many of these features for some of the more custom development applications. We feel really comfortable with our multiple vectors of monetization. Philosophically right now, in particular, given this macro environment, you will certainly, you know, expect that we're in a mode of how do we give, you know, create more value for our customers, make it more of a win-win, that's gonna make sure that customers are stickier with the platform and leveraging us for more use cases. You know, we think ultimately earn, you know, quite a bit of goodwill. That being said, where we see opportunity where a customer maybe is sort of, you know, not at the right price point relative to the value, and what sort of lifts is that, we always kinda take that into consideration. But I think we're really, really satisfied with the pricing model right now. Dylan, I'll let you chime in if you'd like. Oh, no, I think that mostly covers it. The only thing I would add is the trends that we've been seeing recently and what we laid out at Analyst Day continue to play out in the business for the reasons Aaron mentioned, continuing to get more and more customers into Suites where over the past year, we're able to increase our pricing by about 7% year-over-year driven by the same trends that we continue to see in the business based on what our customers are using and the value they're increasingly getting from Box. Dylan, maybe following up on your operating margin comments, can you give us an update on your thoughts for hiring at this point, and then, you know, some of the other areas that you're looking to drive efficiencies? Sure. So I'd say very pleased by the progress we're making in terms of driving leverage across the business, which is what allowed us to raise our operating margin guidance by 50 basis points versus our initial guidance to 22.5%. I would say, you know, really continue to be focused on the plans that we laid out at the start of this year. Looking to grow our sales force in the low to mid-teens percentage range and do the significant majority of our engineering hiring in Poland, which is scaling really nicely. I'd say kind of the strategy that we laid out entering the year into Analyst Day remains the strategy that we're executing to. And would note that we're also seeing some upside from the impact of things like our data center and our public cloud migration strategy, as well as the impact of that lower cost location strategy increasingly showing up in our financial results. Thank you. Your next question comes from the line of Josh Baer with Morgan Stanley. Your line is now open. Great. Thanks for the question, and congrats on a really good quarter. Aaron, when you talk about FY 2023 being one of the biggest innovation years yet, which of your key pillars are you most focused on, and how should we think about this innovation, just as far as completely new product modules versus smaller enhanced features? Yeah. I know this is kind of a lame answer, but you know, across our three pillars, which are security compliance, workflow, and collaboration in our platform, while our investment dollars are not always even across them, the relative importance of them is sort of shared, just because that's sort of the value that we're delivering for our customers. I'm extremely excited about you know, kind of capabilities that are showing up in each of these areas. When I said biggest innovation year, it's because of just the sheer breadth of capabilities across those three pillars that you'll see from us. Significant advancements across Shield and governance for advanced data security protection, and data privacy use cases that our customers are running into. You know, you'll see announcements throughout the year on that front. Quite a bit of work happening in collaboration and workflow. Canvas, you know, being an entirely new, you know, very fast-growing, large market that we're entering, as a net new capability. At the same time, you're gonna see kind of just run rate improvements to our collaboration functionality, as well as major enhancements to our workflow suite. Then, of course, Box Sign, we just announced, you know, in Q1, some major enhancements that came out, for Box Sign, to help our customers with more advanced use cases. The entire roadmap of Box Sign is very well aligned to helping customers drive more of their e-signature processes on Box, retire legacy e-signature vendors into our platform. Of course, our partnerships and integrations, you know, deepening our work with Salesforce, deepening our work with Slack, going really deep with Microsoft across a variety of use cases there. You're gonna see investment across all of those fronts, obviously baked into our targets. We're gonna continue to add a tremendous amount of value for our customers. Thanks, Aaron. Dylan, thank you for all the breakouts, especially the incremental FX since last guidance. One follow-up, just wondering if you broke out FX or constant currency for operating income impact. Then also just wanted to ask about the non-recurring revenue contribution in the quarter. Thank you. Sure. On the operating margin front, pretty similar trends to what we had called out on the EPS side. For Q1, FX had a roughly 1 percentage point impact to operating margin. For the full year of FY 2023, we expect the total FX impact to be about 2 percentage points to operating margin, so about 1% incremental to what we had called out on our last call. From a non-recurring revenue point of view, really just saw, you know, a lot of execution milestones completed from our Box Consulting business. Did not have a material impact on our overall revenue growth as it's just about 3% of our total revenue, but was definitely nice to see a pickup in the revenue that we're able to recognize from our professional services business, Box Consulting. Awesome. Thank you. Your next question comes from the line of Nick Mattiacci with Craig-Hallum. Your line is now open. Hi, this is Nick on for Chad Bennett. Thanks for taking our questions. Maybe if you could just speak to what you're seeing recently in the SMB market and if your thoughts for growth going forward at the lower end of the market have changed at all from a quarter ago? Yeah. We saw very strong results in Q1. You know, the team drove fantastic momentum in the SMB and kind of commercial segment broadly. You know, I think that you know, we're very cognizant of the macro environment from an SMB standpoint. I mean, you know, frankly, businesses everywhere. You know, if you think about the demands of needing you know, a single platform with advanced security with workflow automation with e-signature all in one bundle, you know, we think we have a very strong value proposition in the SMB space. That momentum is continuing to you know, drive forward with, again, a ton of upside when you think about the seat expansion as well as the product plan expansion that's available to us. Got it. Dylan, if you could just help me reconcile the 9-point FX headwind to billings in the quarter in comparison to the 4-point impact in the full year guide. Sure. First we'd note that we wanted to clarify the difference between the total FX impact in Q1 that was 9 points versus an incremental impact in Q1 versus our initial expectations, which was 4 points. What I'd say is the reason that you see more of an impact in Q1 versus what we expect to see for the full year of roughly a 4-point impact due to FX is because that is impacted also by the impact of how FX drives a revaluation of deferred revenue on our balance sheet. Because we did see a pretty material movement in currency exchange rates in Q1 that had an outsized impact on our deferred revenue balances and therefore calculated billings in the first quarter. Makes sense. Thank you. Your next question comes from the line of Rishi Jaluria with RBC. Your line is now open. Hey. Hey, Aaron and Dylan. Thanks so much for taking my questions. I wanna start off by talking about Box Canvas. You know, seems like a nice little introduction to land-and-expand platform, so good value there. But maybe, you know, can you walk us through your strategy and monetization and opportunity there? Just kind of given that you have a lot of other players also getting into this space, including some larger, you know, Microsoft, Zoom, Cisco, right, coming out with features on this, not to mention some standalone point solutions. So maybe help us understand if this is gonna be more analogous to like your strategy with Box Sign. Is there a different monetization strategy? Then I've got a follow-up. Yeah, sure. I think the way that we sort of think about it, I mean, we're very cognizant of the broader competitive landscape and understanding kind of where our products fit relative to different players. That being said, we sort of think about a slight inverted way of the market, which is, you know, we're trying to build an end-to-end Content Cloud, and we ask ourselves, "What do enterprises wanna do with their content?" We do a tremendous amount of market research on, you know, trying to figure out what are enterprises looking to do in terms of collaboration and workflow and business process and e-signature. As we think about that, our job is to then build more and more value when a customer has elected to use our Content Cloud. For us, we already have a product called Box Notes. Box Notes is sort of more of a linear document that you can do, you know, project management in. You do, you know, note-taking in meetings and strategy documents. All of that is sort of kinda knowledge management for the enterprise within Box Notes. Box Canvas is sort of a very obvious, you know, kind of second act within this part of the strategy because it's more of the visual collaboration that you also wanna be able to do. It's the brainstorms, it's the visual content you need to review for a design meeting or a diagram for a business process and a workflow. Really, you know, has the same kind of horizontal applicability as Notes, but more for visual content use case. For us it was actually very kind of straightforward to just say, "Okay, this is gonna be a native capability on the platform. It's gonna be available to literally all of our users and customers." We're not trying to specifically monetize Canvas. What we're trying to do is add more value for every seat that a customer has on Box. We know just from our experience with many other product areas, that leads to more adoption, more usage, and then more upsell into the higher tier plans. When you think about our differentiation of security and governance and compliance, all of that now comes when you're doing that virtual whiteboarding collaboration experience. We don't really think about it as needing to compete with any particular player as much as adding more value for our customers. You know, partly explicitly because we're not charging for it separately. There's not a sort of budget item that a customer is gonna have to compare of, you know, Canvas versus some other solution. It's just more value when you do more of your work within the Box platform. Does that answer the question? Yes. Absolutely. That's super helpful. Then just as a follow-up, I wanted to ask you about stock comp. Stock comp's, you know, still I think relatively high at about 20% of revenue, and I know there's twists and turns on that metric. Just maybe philosophically, can you help us understand how you're thinking about, you know, stock comp going forward and kind of the mix of, you know, options, RSUs versus cash? I know your stock's obviously held up significantly better than most of your SaaS peers. Your stock's not down 90% off the peak, so you're in a very enviable situation from that standpoint. Maybe just help us philosophically how we should be thinking about SBC and kind of that mix going forward. Thank you. Sure. So I'd say that we do expect stock-based comp to trend down as a percentage of revenue pretty steadily in the coming years. The leading indicator of that is the equity burn rate, which did come down even, you know, over the past year by little more than a percentage point. While the philosophy of cash versus equity is pretty consistent with what we've done in the past, would say that the overall more metered hiring growth and our focus on scaling in lower cost locations are some of the drivers of what allows us to show that leverage. At the same time, as we've talked about in the past, very focused on returning capital to our shareholders through our ongoing share repurchase plans, which allow us to largely offset any dilution that we see from equity compensation. Yeah. I think just to build on that, this is something we take incredibly seriously and I think you'll see us be very strong on, especially kind of relative to the software landscape. We're super happy about kind of our focus on this. That's really helpful. Thank you so much, guys. There are no further questions at this time. Ms. Cynthia Hiponia, I turn the call back over to you. Great. Thank you, Emma. Thank you everyone for joining us here today, and we look forward to updating you again on our next earnings call. This concludes today's conference call. Thank you for attending. You may now disconnect.