Good afternoon, and welcome to Box's third quarter fiscal year 2022 earnings conference call. I'm Cynthia Hiponia, Vice President of 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 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 calls on Twitter at the handle @BoxIncIR.
On this call, we'll be making forward-looking statements, including our Q4 and fiscal 2022 financial guidance, our expectations regarding our financial performance for fiscal 2022 and future periods, including our free cash flow, gross margins, operating margins, operating leverage, future profitability, net retention rates, unrecognized revenue, remaining performance obligations and billings, 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 any potential repurchase of 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 in 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, November 30th, 2021, 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 our non-GAAP financial measures.
These non-GAAP financial measures should be considered in addition to, 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 measures, in our earnings press release and in the related PowerPoint presentation, which can be found on the Investor Relations page of our website. Unless otherwise indicated, all references to financial measures are on a non-GAAP basis. With that, let me hand it over to Aaron.
Thanks, Cynthia, and thank you all for joining the call today. We achieved strong third quarter results, marking yet another quarter of delivering both revenue and non-GAAP EPS above our guidance. We produced third quarter revenue growth of 14% year-over-year, a third consecutive quarter of accelerating revenue growth, operating margin of 21%, and RPO growth of 25%, which is well in excess of our revenue growth and an important leading indicator of the strength of our business. Our results show the success of our growth strategy, which is aligned with the three major trends that are driving the future of work. These trends are hybrid work styles, the pressures of digital transformation on businesses, and the ongoing importance of data security, compliance and privacy. The old way of managing content just doesn't work anymore, and that's where the Content Cloud from Box comes in.
With Box, users are more productive, enterprises are more secure, and IT management is simplified and less expensive. Our strong customer metrics are key indicators of the success of our product and platform strategy as more customers are turning to the Box Content Cloud to deliver secure content management and collaboration built for the new way of working. In the third quarter, our net retention rate was 109%, up from 103% in the prior year and up from 106% in the second quarter. We had 97 deals over $100,000, up 56% year-over-year, including a record number of multi-product suite sales, which now includes our Enterprise Plus plan, with 61 suite deals in Q3, deals over $100,000, up 177% year-over-year.
We had a 63% attach rate of suites over $100,000 in the quarter, up from 35% in Q3 FY 2021. In North America and EMEA, suites attach rates were in the mid-70s in Q3. While our suites attach rate declined sequentially in Japan, we are continuing to educate our channel partners around our multi-product plans in order to improve the attach rates in this region. We expect our overall attach rate number to improve in Q4. We continue to leverage our leadership position in core content management and collaboration to expand the full content lifecycle by focusing on our three key product pillars, which are enabled by our highly scalable enterprise-grade infrastructure. These three pillars are focused on, one, delivering the best security and compliance around content. Two, enabling seamless collaboration and workflow in the cloud.
Three, integrating into every app our customers leverage, including the ones that they build themselves. We embarked on our expanded vision for the Content Cloud over two years ago and have advanced major parts of the entire content lifecycle. The launch of Box Shield and Box Relay broadened our reach into the data security and workflow automation markets. This year, we expanded our content ingestion and migration services with Box Shuttle and integrated more deeply with Microsoft, Salesforce, Slack and Zoom, as well as other leading platforms. Building on the success of these offerings, we launched Box Sign to bring native e-signatures to Box. E-signature is one of the fastest-growing markets Box has ever entered, and we are seeing great momentum with customers already. Our initial U.S.-based rollout in October was followed quickly by the global launch of Box Sign, which also included new security and admin features.
These new features include password protection for documents sent for signature, SMS-based two-factor authentication to identify the signer, localized Box Sign user interfaces to enable senders and signers to transact in over 20 languages, and robust admin reporting to provide enterprise-wide visibility and tracking of documents sent for signature. Just weeks after launching our offering, we were pleased to be named a major player in the IDC MarketScape Worldwide eSignature Software 2021 Vendor Assessment, which we view as a validation of our Box Sign solution. In this report, Box was recognized as one of the first multi-tenant SaaS vendors to offer a cloud content management solution, delivering continuous innovation and continuous deployment of the content lifecycle capabilities, in addition to its feature-rich collaboration and file sharing. Since our GA rollout in October, we have seen early success in customer adoption and use of Box Sign.
Third quarter customers include a premier commercial real estate finance company that expanded its use of Box with a six-figure ELA and purchase of Enterprise Plus with additional Box API and Box Sign services. With Box, the organization has centralized all of their content and built a custom deal management portal that deeply integrates with Salesforce and MuleSoft. Box Sign will be replacing their incumbent signature solution, allowing them to digitize more of their paper-based use cases and expand e-signature use to the broader organization. A leading IT services vendor to the U.S. government rolled out the Box Salesforce integration to power their onboarding use case. They previously used an incumbent signature vendor, but to help reduce spend and streamline the onboarding process for their contractors and partners, they have now enabled Box Sign enterprise-wide.
Earlier this month, we announced that the General Services Administration has selected Box Sign technology for its native e-signature capability. Contracts and business agreements are critical to the work that the GSA oversees, so deploying e-signature technology was necessary to digitize their paper-based manual workflows for enhanced productivity and security. We are just getting started with our e-signature product roadmap. We plan to continue rolling out advanced e-sign capabilities over the next several quarters to our customers. As we have been discussing over the last several quarters, security remains a critical driver of our biggest deals. Customers are increasingly focused on Box's security capabilities. To that end, in October, we announced new malware deep scan capability in Box Shield to combat ransomware, as well as enhanced alerts and auto-classification updates.
Box Shield will be able to help customers reduce the risk of ransomware by scanning files in near real time as they're uploaded to Box. Our natively embedded malware detection in the Box Content Cloud delivers a seamless user experience and real-time alerts for IT security teams while helping them avoid multi-solution, multi-vendor complexity. Finally, an integral part of our product strategy is our ability to integrate deeply across the SaaS landscape, and we are pleased that our interoperability has enabled us to build strong partnerships with leading technology companies. At BoxWorks in early October, Kirk Koenigsbauer, CVP and COO of the Experiences and Devices Group at Microsoft, spoke about the importance of openness and interoperability and Box's ongoing collaboration with Microsoft, which included strengthened integrations with Microsoft Teams, Office, and more.
Further, in the third quarter, we enhanced integrations with Slack that will help enable Box to be a content layer within the Slack environment. We launched our integration between Box Sign and Salesforce and announced our Box app for Zoom to make it even easier for our users to work together securely and effectively across distributed teams. We believe that our neutral platform will remain a critical reason customers select Box, especially as they want to work across Microsoft, Salesforce, Google, and many other platforms. We are incredibly focused on bringing innovation and in-demand features to our platform rapidly, and we will continue to double down on the product capabilities and investments that we know are working.
Going into next year, we see significant opportunity to expand our Content Cloud platform into differentiated and important areas that continue this strategy, like further ransomware protection features, new ways to publish content to teams and departments, content analytics, improved native collaboration features, enhanced workflow automation, further integrations with products like Salesforce, platforms like Microsoft, Google, IBM, and many others, further plan for platform enhancements, and much more. Switching to go-to-market, the strength in our third quarter results is also the result of a number of initiatives that we have implemented over the past several quarters.
Our land and expand go-to-market model delivers optimized pricing and packaging offerings as we continue to double down on key verticals such as life sciences, financial services, the federal government, and other sectors. Since rolling out our new simplified suites offering called Enterprise Plus, we have seen even more new and existing customers recognize the full value of the Box platform. As we have discussed on previous calls, 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. You can see the success of our go-to-market efforts clearly reflected in our Q3 customer expansions. For instance, a large bank in the United States did a six-figure expansion with the purchase of Enterprise Plus to replace their core security system and take advantage of Box's security posture, integrations, and user experience.
With Box, the organization can now securely collaborate on critical content with customers, vendors, and partners. An agency of the U.S. government expanded its use of Box with a six-figure ELA and the purchase of Enterprise Plus. They selected Box to reduce threat exposure through a greater network of controls, and to deploy Box Relay to streamline approval processes for new official policy and governance documents. Finally, a multinational pharmaceutical and biotech company purchased a three-year ELA with Box and expanded its use of Box Governance to power secure collaboration company-wide and with external parties as they continue groundbreaking research of COVID-19. Our strategy is to continue to optimize our land and expand model to bring the full power of the Content Cloud to our customers, driving wider seat adoption, higher price per seat, and greater stickiness and retention by making our customers wildly successful with Box.
Internally at Box, we kicked off fiscal 2022 as our year of growth. It is a testament to our employees' hard work and dedication that Q3 was yet another strong quarter, with continued sequential revenue growth re-acceleration and operating margin improvements. As a result, we have raised our revenue and operating margin guidance for the full fiscal year 2022. The confluence of remote work, digital transformation, and cybersecurity challenges is causing enterprises to rethink how they work with their content, and we believe Box is uniquely positioned to gain from this shift. With that, I'll turn it over to Dylan.
Thanks, Aaron. Good afternoon, everyone, and thank you for joining us. Q3 was a particularly strong quarter for Box across all metrics, marked by accelerating revenue growth, improvements in our net retention rate, and record gross and operating profit. Revenue of $224 million was up 14% year-over-year, a third consecutive quarter of accelerating growth, and above the high end of our guidance. Customer demand for our expanded Content Cloud offerings and strong sales execution are driving results with 100K+ deals up 56% year-over-year, and 100K+ suites deals growing 177% from the prior year. As our customers are increasingly adopting products with more advanced capabilities, roughly 30% of our revenue is now attributable to customers who have purchased suites, a significant increase from the high teens a year ago.
We ended Q3 with remaining performance obligations, or RPO, of $948 million, a 25% year-over-year increase, and exceeding our revenue growth by a full 11 percentage points. Q3's RPO growth demonstrates the increasing value we're delivering to customers, leading to longer term agreements to support our customers' content strategies. We expect to recognize more than 60% of our RPO over the next 12 months. Q3 billings of $231 million grew 25% year-over-year and well ahead of our expectations to deliver a Q3 billings growth rate roughly in line with revenue growth. This outcome reflects the continued strong sales execution that we've been seeing in our enterprise and SMB markets.
Our net retention rate at the end of Q3 was 109%, up from 106% in Q2, and up significantly from 103% in the year ago period. Strong suites momentum is accelerating customer traction and adoption, driving an improvement in our customer expansion rate and a strong and stable annualized full churn rate of 5%. We are proud of the increase in net retention that we've achieved this year, and we expect to deliver continued improvements in this metric on an annual basis. Turning to margins. Gross margin came in at 74.7%, up 130 basis points from 73.4% a year ago. Q3 gross profit of $167 million was up 16% year-over-year, exceeding our revenue growth rate by 200 basis points.
Our strategy to optimize our data center footprint and public cloud infrastructure continues to deliver hardware and software efficiencies, and we're well positioned to deliver additional gross margin expansion over time. We continue to improve our profitability, and we are steadfastly committed to unlocking further leverage in our operating model. We are increasingly focusing our hiring in lower cost locations to expand our talent pools and generate additional leverage. Most notably, we're steadily scaling our engineering center of excellence in Poland, where we're now approaching 100 full-time employees. Q3 operating income increased 32% year-over-year to $46 million, or 20.7% operating margin, a 270 basis point improvement from 18.0% a year ago. We delivered $0.22 of diluted non-GAAP EPS in Q3, above the high end of our guidance and up from $0.20 a year ago.
Our Q3 GAAP EPS result included a one-time $0.07 impact from costs related to shareholder activism fees in the quarter. I'll now turn to our cash flow and balance sheet. In Q3, we delivered cash flow from operations of $46 million, up 2% from the year ago period and up 33% year to date. We also generated free cash flow of $31 million, a year-over-year improvement of 19% and a significant increase of 73% year to date. Capital lease payments, which we include in our free cash flow calculation, were $12 million, down from $15 million in Q3 of last year. For the full year of FY 2022, we continue to expect CapEx and capital lease payments combined to be roughly 7% of revenue as compared to 9% of revenue last year. Let's now turn to our capital allocation strategy.
We ended the quarter with $709 million in cash equivalents, restricted cash, and short-term investments. Over the last couple of years, we have been able to significantly improve our profitability and cash flow generation while continuing to make prudent investments to extend our leadership position and re-accelerate growth. We remain committed to opportunistically returning capital to our shareholders. As such, our board of directors recently authorized a new $200 million common stock repurchase program. Combined with our previously announced $500 million buyback authorizations, we now intend to opportunistically return $700 million to our investors in the form of stock buybacks. Including shares repurchased to date, we have approximately $260 million of remaining buyback capacity.
In addition to a robust stock repurchase program, we intend to leverage our strong balance sheet and consistent cash flow generation to invest in key growth initiatives and to fund strategic M&A opportunities that will enhance and accelerate our product roadmap. Our SignRequest acquisition earlier this year highlights our disciplined approach to M&A as it accelerated our product innovation and enabled us to more rapidly deliver highly demanded features to our customers. With that, I would like to turn to our guidance for Q4 and fiscal 2022. For the fourth quarter of fiscal 2022, we anticipate revenue of $227 million-$229 million, representing 15% year-over-year growth at the high end of this range and a fourth consecutive quarter of revenue growth acceleration.
We expect our non-GAAP operating margin to be approximately 21%, representing a 270 basis point improvement year-over-year. We expect our non-GAAP EPS to be in the range of $0.22-$0.23 and GAAP EPS to be in the range of $-0.06 to $-0.05 on approximately 158 million and 150 million shares, respectively. We expect our Q4 billings growth to be in the high single-digit range. Q4 billings will be negatively impacted both by currency exchange rates as well as one of our largest customers moving from annual billings to semi-annual billings upon their Q4 invoicing. Combined, we expect these factors to result in a cumulative one-time downward impact of roughly 4 percentage points of billings growth.
We continue to expect to deliver FY 2022 billings growth at a rate above our revenue growth rate, with roughly 15% year-over-year billings growth in FY 2022, a full six percentage point improvement from the prior year. For the full fiscal year ending January 31st, 2022, as a result of our strong Q3 results, we are raising our revenue, operating margin, and EPS guidance for the full fiscal year. We expect FY 2022 revenue to be in the range of $868 million-$870 million, up 13% year-over-year at the high end of this range. This is an increase from last quarter's full year guidance of $856 million-$860 million and represents a 200 basis point acceleration from last year's revenue growth.
We expect our non-GAAP operating margin to be approximately 20%, representing a 460 basis point improvement from last year's result of 15.4% and an improvement over our previous guidance of 19.5%. We now expect our FY 2022 non-GAAP EPS to be in the range of $0.83-$0.84 on approximately 164 million diluted shares, and up from 70 cents in the prior year. Our GAAP EPS is expected to be in the range of $-0.35 to $-0.34 on approximately 156 million shares. We continue to expect our FY 2022 revenue growth rate, combined with our FY 2022 free cash flow margin, to be at least 32%, a significant 600 basis point improvement from last year's outcome of 26%.
Our strong Q3 performance clearly demonstrates that our Content Cloud platform is resonating with customers as we execute on our strategy to drive long-term profitable growth. This year, we're on track to deliver four consecutive quarters of revenue acceleration while generating operating leverage across the business. We are well on our way to deliver against our target of generating revenue growth plus free cash flow margin of 40% in FY 2024, two years from now. Before we conclude, I'll hand it back to Aaron for a few closing remarks.
Thanks, Dylan, and thank you again everyone for joining us today. We'd also ask that you please save the date on Wednesday, March 16th, for our Investor Day 2022. We will be providing more details on this event in the coming weeks, but we look forward to seeing you there. Overall, Q3 marked another significant step forward in the evolution of our Content Cloud strategy. As enterprises are now making increasingly strategic long-term decisions on how to support a remote workforce and digital processes, they need to maintain a high level of security and compliance. Our continued product innovation and our go-to-market initiatives are positioning Box as the leader in the Content Cloud market. Thanks again for joining us this afternoon. Dylan 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, please press star then the number one on your telephone keypad. Again, that's star one on your telephone keypad. Your first question comes from the line of Jason Ader from William Blair. Your line's now open.
Yeah, thank you. Hi, guys. I guess on the Q4 commentary on billings, I'm wondering, is there anything in Q3 that was unusual, you know, kinda early renewals or anything like that drove the strength in Q3? Or was that just kinda organic, just you felt, you know, you saw really good bookings in the quarter?
Sure. There wasn't anything unusual in Q3. We saw the normal volume of run rate early renewals that we've been seeing throughout this year, largely driven by customers looking to adopt our broader capabilities such as Suites. It's really the result of very strong execution in the third quarter, which also shows up in some of those metrics, like the big deal counts, and our RPO growth.
Gotcha. Okay. Aaron, as you think about, you know, how this year has progressed, and I'm sure you're pleased with how it's progressed, but how has it impacted morale, retention, recruiting, all those sort of soft things, you know, that as a CEO, obviously, you focus on?
Yeah. No, thanks, and great to connect, Jason. Overall, I mean, we are incredibly excited about the performance this year. You know, we came out with a very clear strategy that this was the year of growth. That was our internal mantra, and it was really building on the past couple of years of strategic evolution in the company, both, you know, driving accelerated top-line performance as well as bottom-line efficiency. I think the morale has been very strong. I mean, there's always, you know, the volatility that the hybrid work environment and the healthcare crisis presents. Overall, I've been incredibly happy about the strength of our culture and the commitment to world-class execution that we've seen this year. These results are a testament to that and we expect to continue to drive this kind of execution going forward.
Thanks very much.
Thank you. Your next question comes from the line of Ittai Kidron of Oppenheimer & Co. Your line's now open.
Hi, this is George stepping in for Ittai. Aaron or Dylan, either one, can you maybe give us a sense of, you know, the strong increase that you've seen in net retention, some of the drivers behind that? How much of that is user growth? How much is coming from the Suites momentum and adding new products into the mix?
Sure. That net-net retention rate is comprised, as a reminder, of customer net expansion, which includes both upsells and downsells and a strong and stable 5% full churn rate. Year to date, the improvement that we've seen from 102% entering year to 109% in this most recent quarter is driven primarily by strong expansion within our existing customers. They're seeing a pretty healthy mix between the kinda cross-sells and price per seat improvements, as well as customers just buying more seats. It's pretty ratable mix across those two. We then also have a little bit of a benefit as we lap the COVID impact that we saw in Q2 and Q3 of last year. Overall, really pleased with the trends that we're seeing, and I think really demonstrates the stickiness and the demand for the suites offerings that we've been rolling out and driving traction around.
All right. Following up on that, also seeing good traction with larger customers or larger footprints. How do you feel about the room for expansion you have within, let's say, your G2K customer base? Is it still relatively low penetration, and you have quite a bit of room to grow there?
Yeah. Great to connect. We are seeing that same kind of upside that we've talked about previously in that 6x-7x range of seat expansion within our overall customer base. We haven't cut it by G2000 to the specifics of your question, but we generally see a significant amount of upside across the Fortune 500 and even our largest customers that we have today. Overall feel very strong about the total upside we have within the customer base. For seat expansion as well as price per seat improvement that will be driven by moving customers into our multi-product plans.
All right. Well, thank you.
Thank you. Your next question comes from the line of Brian Peterson of Raymond James. Your line's open.
Thanks for taking the question, and congrats on the really strong quarter, guys. Aaron, maybe one for you. I know when COVID started, I think there was a belief that all the trends really work in your favor, but not right away, right? Like, I think Zoom was an application that was really adopted. I'm curious what you're hearing in terms of kind of broader market demand for kind of like Content Cloud and how much the improvement we saw in the third quarter was market driven versus, you know, a lot of Box specific dynamics like suites and productivity, et cetera. Any way to kind of parse that out?
Yeah, I don't think we'd be able to kind of quantify the two components as much as to say, the execution you're seeing is a result of literally a couple of years of evolving both the strategy, the go-to-market model. We've talked a lot about our land and expand motion really being focused on simplifying and driving a much more repeatable sales motion to our customers. That's now fully baked into the company. Our product suites, which now includes Enterprise Plus, has been a sort of further multiplier and force multiplier of that trend. And then our product roadmap of being able to double down in data security and compliance, our e-signature solution have all been incredibly effective from a product evolution standpoint as well.
That's obviously the execution side that has gotten us to where we are today. It certainly is helped by the fact that customers are thinking a lot more about their long-term digital transformation and IT strategies. You know, last year we noted that there was more of a triage mode that some customers were in. They maybe needed sort of rapid seat expansion within their accounts. This year, we've seen a lot more methodical, long-term strategic planning around IT architectures and where content management fits in to those architectures. That has led to just much more strategic conversations with customers. I think that best is shown in our big deal metrics. You know, 97 deals over $100,000, up 56% year-over-year. You know, we see it as a tremendous stat and it really highlights the strength of the platform and the market environment that we're in.
Great. I appreciate the color, Aaron. Maybe just a follow-up to an earlier question. Like, obviously I think the billings and the RPO numbers were better than we expected. I just wanna make sure that didn't pull forward any demand from the fourth quarter. You know, typically that's the seasonally strongest quarter for new business. Are you seeing the pipeline build in commensurate with the strong trends in the third quarter? Just curious to get some color on that. Thanks, guys.
Sure. As we shared previously, our billings results can be variable on a quarterly basis. We've seen strong billings growth throughout the year, and for the full year, we continue to expect to deliver billings growth higher than our revenue growth at roughly 15%. As mentioned, there are a couple of items, both foreign exchange rates and then a payment duration change from annual to semi-annual in one of our largest customers, which combined account for a cumulative one-time downward impact to the billings growth in Q4. We also have a somewhat tougher comparison in Q4, which is last year when we generated the highest billings growth for that year.
Overall, again, this isn't impacted by any sort of, you know, unusual volume of pull forwards or any, you know, softening in the strong underlying momentum that we're seeing in the business and really the combination of some of those more cosmetic factors. Again, based on the factors that do tend to impact billings in any given quarter, as always, we wanna be conservative with the expectations that we set.
Good to hear. Thanks, everyone.
Thank you. Your next question comes from the line of Chad Bennett from Craig-Hallum Capital. Your line's open.
Great. Thanks for taking my question. Nice job on the quarter, guys. I guess in trying to kind of understand better, and I think a couple people have asked this question different ways, but I mean, the $100,000-dollar deal count was up significantly and in the quarter, and we've talked about suites, I think, going on almost a couple years now, and it seems like, you know, that's really obviously accelerating or becoming more real, I should say, now.
Is there a way to think about, you know, I know people have asked this in the past, you know, whether it's suites or now Enterprise Plus that's within the suites, you know, is there any way to look at the cohorts that have adopted suites and say, okay. I know it's embedded in net expansion, but a lot of things are. Kind of what the uplift has been for suite adoption and enterprise plans and so forth, just as a whole or as a cohort over the last couple years.
Sure. This is Dylan. I can take that. I would say that as we think about the overall impact of customer economics when they begin to adopt our suites, from a pure pricing standpoint, we tend to see a rough doubling versus what customers tend to pay for just the core Box service. It's a significant impact and positive impact on everything from average contract values, price per seat, and the net retention rate and gross margins. I would say that from a longer term cohort view, it's probably a bit early to see how Suites plays out, as especially with Enterprise Plus, we've just introduced that to the market a few months ago.
I would say that when our customers begin to adopt our more advanced capabilities that are much stickier, we do tend to see much higher net retention rates, which is a big part of what's driving the improvement that we've seen this year. When you compare customers who have adopted our add-on products, including Suites versus those who haven't, those customers have net retention rates of about 20 points higher than our customers who are just using the core Box service. Part of this mix shift and that impact is what gives us the confidence that we've shared in terms of the longer term growth and the overall strength in net retention.
Got it. Dylan, just as of today, you know, just again, referring to the significant growth in the $100,000-dollar deals, what percentage of the revenue base now is paying you north of $100,000 a year in business?
I would say it's incrementing up from the last time that we reported this, although it hasn't changed materially. You can think about kind of 60%-65% of our total revenue is now attributable to our six-figure plus customers.
Got it. Perfect. Okay. One last, if I could, real quick. Just the customer, the large customer, I should say, that changed their billing duration from annual to semi-annual, is there any color behind why they would make that change? It seems like people go the other direction these days. I'll hop off. Thank you.
Sure. No, nothing really to read into there. It was just something where that customer had some sensitivities around that. I would note that that contract and that customer has actually been increasing their annual contract value pretty steadily over time, and they are under a multiyear contract duration, even though the payment durations came in a bit, or we expect them to come in a bit upon their Q4 renewal. To your point, that is not something that we regularly see, but they did have some unique circumstances that we wanted to accommodate in the spirit of the partnership.
Got it. Thanks for the color.
Your next question comes from the line of Steve Enders of KeyBanc. Your line's now open.
Great. Thanks for taking the question. Just wanna touch on what you're saying on the sales side and how rep productivity has been trending this year. On top of that, how you're seeing the current and hiring environment to bring in new reps at this point.
We've been really pleased with the improvements that we've seen in sales force productivity really over the last couple of years. As a reminder, last year, that grew by about 13%, primarily driven by our enterprise sales force. Year to date this year, we've seen double-digit improvements in both our enterprise and SMB sellers. That's really been driven by the traction from our newer products and suites that we've talked about, and from our strategy to really focus our go-to-market investments in higher performing regions and geographies, which is paying off and which is the approach that we'll continue to take going forward.
In terms of the overall growth in the sales force, we remain on track to grow the size of our sales force in the low teens % range this year. Despite a challenging hiring environment that I think we're seeing across the industry, we have been able to steadily grow that sales force, you know, towards those targets over the past couple of quarters.
Okay. Perfect. That's good. Great to hear. Just on Box Sign, it sounded like you called out some pretty solid wins there in the quarter. Just wondering kind of what, if these were competitive engagements, what was kind of the biggest differentiator for Box Sign versus maybe some of the other providers out there?
Yeah. As I mentioned, a couple of them were replacing incumbent solutions or at least anticipated to replace incumbent solutions. In almost all cases, if there's any kind of competitive dynamic with another player, it's really the strength of having the embedded e-signature in Box as our main differentiator. Whether it's the end user interface, where within one click you can then launch into an e-signature process without transferring any files and going through another system, or through our APIs, where it's now a first-class API directly in the Box platform. Both of these represent very seamless ways to get e-signature included in your content that's already in Box.
If you just think about the tens of billions of assets and files that we have within the platform, a significant, you know, portion or a meaningful portion of those assets are contracts and NDAs and other kinds of documents that that are really intended to get signed. We can simplify and streamline those processes with native e-signature capabilities. We're really happy that customers are already gravitating toward the solution. This is a very, very large market, so we certainly wouldn't, and it's not a goal of ours to be kinda head-to-head competitive with any particular product in the space. It's really about expanding the value of our platform for our customers to be able to drive greater seat growth, price per seat improvements, as well as higher net retention rates.
Perfect. Great to hear. Thanks for taking my questions.
Awesome. Thank you.
Thank you. Your next question comes from the line of Josh Baer from Morgan Stanley. Your line's now open.
Great. Thanks for the question, and congrats on a good quarter. Aaron, you had a long list of focus areas as far as innovation looking ahead from ransomware to content analytics, I think, and many others. Just wondering what future area or opportunity are you most excited about?
Yeah. That's always dangerous. I would say that there's sort of three big areas that we're doubling down in. Obviously, as for any folks that have seen our, you know, presentations on our strategy, we're really focused on building out the complete Content Cloud. The entire life cycle that content goes through, we wanna make sure we have core native capabilities that can support that set of functionality and use case. There's three areas in particular that most of that functionality falls into. One is on security and compliance. Two is on workflow and collaboration, and then three is really on our platform and our open APIs.
Some of the things that I get most excited about when we're looking at our roadmap, obviously the advancements in e-signature and all of the capabilities around workflows around e-sign, doubling down in data security with Box Shield. You know, we know that the environment around ransomware and threat detection is increasingly important for customers. Compliance and data privacy and governance starts to now fall into that space as well. Then of course, doubling down in really how customers collaborate and share information, whether that's within Box or within our partner ecosystem. I think you'll see us riding multiple market tailwinds, all of which are really coming together to help transform how customers think about their content. Content, we believe, is going to increasingly be a strategic part of our customers' IT stack. We believe that we have the most advanced platform for solving those challenges for customers.
Got it. One on Japan, you highlighted the decline in suite attach. I think usually Japan is a highlight. Just wondering any more color there on the cause. Is it a concern, like more broadly than the suite attach? Are you kinda saying that there was weakness in that region, or should we have another takeaway? Thank you.
No. Yeah, yeah. Just to be incredibly precise, it was a very strong quarter for Japan, including the 100K+ deal metrics. Because Japan is so channel-driven, there's some sensitivity of the attach rate of certain new products and efforts that we're driving that relate to the enablement and education of our channel partners. That's something that we're extremely focused on right now, and we expect that metric to improve in Q4 and beyond. Overall, very strong and healthy demand in Japan. It was just that one kind of metric of attach rate. In fact, when we even look at the deals that were coming in from Japan, many of the deals had multiple add-on products. They just weren't packaged as a suite. It's really a commercial mechanic in that case that we were seeing. Again, we do expect this to improve in Q4 and beyond.
Great. Thank you.
Thank you. Your next question comes from the line of Pinjalim Bora of J.P. Morgan. Your line is now open.
Oh, great. Hey, guys. Thanks for taking my question, and congrats on the quarter. You obviously have very strong 100K adds. I wanted to ask, how many of these adds that you're seeing are net new lands versus expansions, because I heard a number of six-figure transactions that you did. Is that the six-figure lands versus expansions into six-figure, is that ratio kind of going higher?
Sure. I would say the deal count metrics that we disclose are the new contract value that we add. For example, if we had a customer paying $80,000 per year and then grew to $130,000, they would not be included with that in that metric. It's just new contract value of at least $100,000 is what is included. In terms of the proportion of new customers versus expansion, it moves around a bit each quarter, but we tend to see roughly 70%-75% of both our bookings and six-figure deals coming from existing customers, and then the remaining 25%-30% from net new customers buying Box for the first time.
Got it. One quick follow-up, Dylan. Obviously, some of the leading indicators that we see are running ahead of revenue growth. If we look at deferred revenue, RPO, CRPO. I mean, is there a scenario that revenue growth could start to catch up to these leading indicators over the next years?
Yeah. As mentioned, we are certainly seeing strong momentum in the business, and are focused on continuing to, you know, drive as much revenue growth as possible. Would note that strong RPO growth is driven by several factors. In addition to the strong underlying bookings growth that we're seeing that translates directly into revenue growth, we are continuing to see a higher volume of large multi-year deals, which boosts our backlog and total RPO, without necessarily translating directly into forward revenue. We've also seen a significant portion of our smallest customers moving from monthly to annual contracts, which benefits short-term deferred and total RPO. There are a few, you know, kind of more cosmetic and accounting items that are positively impacting our reported RPO growth. Certainly, you know, given the momentum that we're driving, we do see the ability to continue improving our growth rate.
Got it. Thank you.
Thank you. Your next question comes from the line of Edward Magi from Berenberg. Your line's now open.
Thanks, guys, for taking my question, and congrats on another great quarter. Just a few questions from me. We're seeing growth of both RPO and revenue continue to accelerate here. Perhaps there's plenty left in the tank. You spoke about sales force hiring, but can you dive a little deeper for us into the investments the company has made in go-to-market and strategy in previous quarters? How these are just beginning to shine through, perhaps with stronger net retention and new adoption of the platform?
Sure. I'd say that, you know, a lot of the big areas that we're focused on, in terms of driving the go-to-market execution, you know, first really starts with the product innovation and the way that's impacted sales force productivity and a lot of the momentum that we're seeing. As you mentioned, a big direct driver of that as well, that you know, we kinda tune our plans around, is our AE hiring rate. We do expect to continue driving some improvements in sales force productivity even as we grow our sales force. But we are expecting really to continue growing, and we'll give more color into next year's expectations on our Q4 earnings call.
Outside of the size of the actual sales force, based on a lot of the improvements we've made to our digital marketing, you know, demand gen channels and just other ways to drive interest in a really efficient way, we have invested in that kind of digital demand generation as well to drive efficiencies and growth in addition to the pure sales force productivity improvements.
Great. That's helpful. Just another one here. Third quarter NRR was 109%, up from 106% last quarter. It continues to show a nice recovery from where it was just last year. Can you discuss how you think about the mix shift of net new versus net expansion in terms of the long-term outlook for growth, perhaps, you know, perhaps beyond 2023, 2024, 2025? Thanks.
Sure. I would say that for the foreseeable future, so over you know that timeframe, the next few years, we do expect to see a relatively stable contribution from you know net new and versus expansion in terms of
This concludes today's conference call. You may now disconnect. Thank you.