Hi, good afternoon. Thank you so much for joining us here today. My name is Stephanie Wakefield, as hopefully many of you know, and together with Alice Lopatto, we run investor relations here at Box. I guess I should be using the big mic. First, wanted to start off with the safe harbor statement for today's comments. During the course of today's presentation, we will be making forward-looking statements, including statements regarding our expected financial performance and future products and services. These statements reflect our best judgment based on factors currently known to us, and actual events and results may differ materially.
Please refer to the risk factors and documents we share with the SEC, 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 those set forth in the forward-looking statements we make today. We disclaim any obligation to update or revise them. In addition, during today's presentation, we will discuss non-GAAP financial measures. These non-GAAP measures should be considered in addition to, but not as a substitute for, or in isolation from, our GAAP results. When we post today's presentation in the IR section of our website, they will include disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results. With that out of the way, I just wanted to take one minute to set some context for today's presentation.
As many of you know, I started consulting at Box just about two years ago, and I've been now full-time for about a year. To be fair to say, when I started consulting, I was a little skeptical. As I got a chance to get to know the company, I started to get really excited because it seemed like there were components that made for a really great opportunity and a really great company. Some of those things were products. At the time, it was a single product, but it was starting to add more products. The customer loyalty is reflected in the churn rate and customer references, but a very happy install base. The leadership team, which may be younger than most, is incredibly knowledgeable and passionate and eager to add experience to the team and take counsel from that experience.
The partner ecosystem, which was strong at the time, and has been building even further. The corporate culture, and that's something I think doesn't get mentioned nearly enough as a critical factor success. The culture here, not just working with Alice and with Dylan, but the entire team working together. It's a really great collegial environment to work with to really focus on achieving our goals. I've been here for a year now, and it's just exciting to see all of those components really come together. The partner ecosystem, with a number of announcements we've made over the past year, has gotten a lot stronger. Customers continue to be very happy. The product announcements we're going to go through today, I think are really exciting. The other element of this is that I've become a constant Box user.
I live the future of work every day, collaborating on our technology, not just being able to see a file, but being able to collaborate on it, not email and answer back. Not having to worry about version control for an event like this because we're all collaborating in one document in real time makes my life so much easier, and it's hard to place a value on that and the security of that environment. I think it's a really exciting time for the company, the opportunity, the technology. I'm excited to share that with you today. We're going to go through I did the safe harbor.
We're going to go through Aaron and Jeetu and Neil kind of setting up the opportunity that we have in the Cloud Content Management market, how we're going to really seize that opportunity, with Steph Carrillo and Dylan talking about the actions that we're taking. We'll have a Q&A at the very end for everyone to ask questions. With that, I would like to turn it over to Aaron, ready with his coffee.
Thank you, Stephanie. How are you doing?
I'm good.
If it makes you feel better, I was never skeptical about you coming on board.
I appreciate that.
We do not share that, but thank you. Stephanie's done an unbelievable job helping us build a deeper relationship with all of you, and it's really been great to work with you over the past little over a year. Thank you so much, Stephanie. We are at a pretty, I think, exciting inflection point as an organization, and it's, I guess, not so coincidental that the structure of today's conversation actually represents that inflection point. What Jeetu and I are going to talk about is what we're doing from a product standpoint to transform our platform and build the leading Cloud Content Management platform that changes how people can work with their information.
Stephanie, in particular, is going to talk about what we're doing from a go-to-market standpoint to really turbocharge our ability to get the technology in the hands of customers all around the world. This summer has been, operationally, a very exciting summer within the company because we have both brought together our product and platform organizations, now being led by Jeetu, and we've gone through a transition where Stephanie coming on board with 25 years of experience at IBM, Apple, Cisco, Telstra, serving large enterprises and really helping us bring together and integrate our global go-to-market functions. She's really very quickly ramped up way faster than I think we even anticipated. I think she's going to share some of the ways that that's coming together. Big inflection point on product and big inflection point on go-to-market all coming together.
Our job as an executive team is to make sure that this all works together harmoniously with a culture that we can be really proud of and that continues to let us innovate and stay ahead of the competition. Our mission at Box is we want to power how the world works together. This is what we get really excited about, is all this opportunity to change how people work, share, collaborate, and access their information from anywhere. We started 12 years ago with a similar idea, which was we wanted to be able to, as end users, be able to access files from anywhere. Being able to bring this into the enterprise at the scale that we have is very exciting. We now have over 76,000 customers on the Platform. 65% of the Fortune 500 is now using Box.
We have over 100,000 developers that are using the Box Platform. Actually, I don't know how many of you were able to attend Jeetu's keynote just a few minutes ago, but it was incredible to see the kinds of customers on stage sharing their experiences of what they've been doing with Box to transform their organizations. We had companies like the S&P, we had Walmart come share how they're driving their digital learning technologies and Platform using the Box Platform for the content engine, as well as some of the great partners that we're working with. We had Medidata, one of the leading life sciences software companies and research platforms that are building on top of Box, share their experience in front of all of our customers as well.
Really, really great, healthy ecosystem of that intersection of developers building amazing applications, and customers really taking our technology and using it for all new use cases and in all new ways. What's I think so unique about Box and so unique about our product space in particular is that we work with companies that are three or five or 10 employees all the way up to some of the world's largest enterprises. Again, Walmart being on stage sharing how they're leveraging our Platform for hundreds of thousands of employees being trained within their academy experience. Yesterday, we had Brian Chesky from Airbnb talk about their cultural transformation. They're an exciting customer that uses Box at scale for collaboration and so many other organizations with amazing missions. We've had some great success recently in the government space due to our FedRAMP compliance.
Organizations like NASA, like FDA, FCC, the Department of Justice, and so many others are now leveraging Box for their content management and collaboration. In the digital arena, as I just mentioned, with Airbnb, but also companies like Spotify, and other organizations that are leveraging our technology to scale. It's not just the world's largest organizations. We're working with, obviously, a lot of big industrial or Fortune 500 companies. We had Jeff Immelt speak at our CIO event on Tuesday, and share how he helped drive the transformation and how his executive team helped drive the transformation of GE. We were really, really fortunate to be one of the partners that they chose to help drive that effort within General Electric, one of our really kind of transformational customers that we have.
We're able to work with companies like Procter & Gamble and Toyota and Eli Lilly and Pfizer and AstraZeneca, very large sort of Fortune 500 companies that are going through this transformation. What all these companies have in common and why companies come to work with us and why they come to this conference and why we are so fortunate to be able to spend time with them is these are organizations that are embracing the digital age. I think we hear a lot about the digital age and digital transformation. Every tech conference obviously has to have slides and content on digital disruption. What tends to be the focus of digital is how do I build better digital experiences for my customers and for my clients?
It usually is we're talking about how we can have real-time services, how we can have personalized applications, how we can have better relationships with our clients. That's what most of the sort of ecosystem thinks about when they think about digital transformation. For us, we think that digital transformation means something way bigger. We think that it means that it's a completely and fundamentally different way to operate inside of this landscape. We see that markets are changing faster than ever, so there's no company that has an incumbent or leadership position in their market just as a given anymore. Obviously, startups are emerging in every single category of product and service, so we're not confined to the tech industry. That is always top of mind for our Fortune 500 customers is what is the next thing that might disrupt me?
What market am I potentially missing out on because I don't have the right team in place? We also know that partner ecosystems are in flux, and this is another kind of fascinating trend, which is if my organization as an enterprise is in constant change, then that means my partner's organizations are in constant change, which means that I have to find a way to organize and work within that ecosystem with a lot of variability, a lot more variability than ever before. We're dealing with all new threats and regulations. It used to be if you go back five or 10 or 15 years, I think most of the enterprise world thought that the biggest cybersecurity threat was in banking, or maybe credit card numbers would be stolen. That was sort of the primary digital asset that might be taken advantage of.
Now we're seeing digital threats and cyber threats in every single category, every single industry. We've seen it in the government, we've seen it in media, we've seen it in life sciences, we've seen it in healthcare. Everybody's data is potentially vulnerable, which is putting a lot of pressure on IT organizations and businesses. We're dealing with a lot of new regulations. Literally, if you just take any sort of snapshot of a monthly timeframe, there's all new sort of privacy requirements, compliance requirements for every industry. What we find so fascinating is that even if one of our customers is not directly regulated, if their customers are in a regulated industry, they're likely impacted by those regulations.
You take GDPR as an example, which basically any either multinational company or company doing work with customers who are multinational, they're going to be dealing with a lot of privacy and data management requirements that companies like Box are going to be able to help them with. We're dealing with all new threats and regulations. This is sort of business in the digital age. I think we always think about sort of how does a company compete with an Uber or an Airbnb or a Lyft or a Spotify, and we think about the customer or consumer experience. When you go behind the scenes, these are the bigger challenges that we have to go and tackle. We know that every company has to become a digital business. We know that digital companies operate in fundamentally different ways.
If you look at sort of how a General Electric was run or it operated 10 or 15 or 20 years ago, it would look a little bit more like the list of things on the left side. Work was more asynchronous, a lot about vertical integration. We need to own the assets and resources internally. A lot of sort of guesswork and intuition to make decisions, a lot of manual-driven processes. Now, if we look at how work needs to be done in the digital age, we see that it's real time. Fundamentally, it's about working with the extended enterprise. How do you get scale by leveraging partners and companies all around you and contractors all around you, and how do you actually begin to share and transact and work with those entities?
It's about using data and making sure data is available to every decision-maker in the organization to be able to make decisions. Data's not just available to the people at the top of the organization. As we shared with a lot of updates yesterday and today, it's about bringing intelligent experiences to your enterprise. Whether that's back-office workflows or the front office or customer-facing experiences, how do we make them more intelligent? When you kind of wrap all of that up, you think about, okay, well, all of this is going to be information-based. Which means that information is going to be flowing over the internet, it's going to be flowing into mobile devices, it's going to be flowing to customers. We have to now think about protecting the virtual world in a fundamentally different way.
Which means that the traditional firewall-based, four walls of the organization architecture just doesn't work in the enterprise. This is kind of throwing up most of the traditional IT architecture that most companies have that they're dealing with. We think this is what the future of work looks like. If you're ever kind of wondering why is it that a General Electric or a Pfizer or a Walmart is spending time with Box, what are they thinking about? What are we talking about? It's because they're going through this transformation, and they're dealing with all of the aspects of working on the right side of that graph, and how do they get there, and who are their partners going to be to help them get there?
What we know is that how we collaborate, how we share, how we manage, how we secure, how we govern, how we create value from our information is at the very heart of the digital age. Digital equals information, and vice versa. Outdated information technology and business processes are, in many cases, holding our customers back or prospective customers back. When you look at our category in particular, if you look at the past 25 years, there's been about four eras of technology that customers have used to try and manage their data and make sense of it and work with it. In the early '90s, it was network file shares, so this was just your classic storage infrastructure. Then you had the need to kind of control it and manage it and govern it and build workflows around it.
That's where you needed ECM systems and document management systems. All of a sudden, people brought in their own mobile devices into the enterprise, they wanted to be able to share externally. They wanted to be able to access data on the road so that you had file-sharing tools. Finally, we had to deliver digital experiences for our customers, which meant that customers were beginning to build applications on all new sorts of platforms. Each of these architectures made complete sense in the time that they sort of emerged. They made complete sense at the time that they were created. What's funny is we'll show this graph to some of our bigger customers, and they'll be like, "I wish that is what I had, but I have 50 times that.
I actually have seven more vendors in each of those columns in my IT organization, which means I'm paying maintenance, or I'm having to manage, or I'm having to secure, or I'm having to upgrade systems across four different eras of architecture from basically numerous different vendors that I have to go work with." I finally found a word that is a real word. That's what we're tending to see from customers. You zoom out, and while each of those technologies made sense in the time that they were put together, you zoom out, and it ends up kind of creating an entire mess for our customers. This means our work is fundamentally fragmented. At the end user level, it means I can't find the things that I'm looking for.
What ends up happening is people just bring in their own tools because I don't know where that file is stored. I don't know where that research document exists. I don't know where that marketing asset is. If you look at it, our business processes get disconnected. One of the biggest challenges about each of these eras of technology is we still have only some set of information that needs to flow through all of those technologies. If you look at a marketing team in a Fortune 500 company, they might have files stored in their network file share. They need to be able to put it into a digital asset management system. They need to share it with a client or a customer or an outside agency, and they just go and email the file.
They spent on the infrastructure for their storage, probably the security around that. They spent on the software for their digital asset management or enterprise content management, they're just going and duplicating the file and sending it over the internet via email, they've lost all of the protection, all of the reporting, all of the analytics, all of the security as soon as they send that email. That means our business processes are fundamentally disconnected, and people are not able to get to the information they need. If our business processes are disconnected, we're working in lots of platforms, we have all these data silos, it means that it's really, really hard to secure our information.
It's impossible to know exactly where the sensitive IP is in my company because it could be in 50 systems, I have no way of understanding where the sensitive information goes because the user is certainly not going to tag it. The user is not going to say this is sensitive because the user doesn't have time. We don't actually know how to secure enterprise information in this architecture. We said last year at BoxWorks, what if there was one platform that helped companies work in the digital age? It would need four things. It would have to be able to enable collaboration and business process across the extended enterprise. It would have to be secure and compliant for every industry and geography, so you'd have to be able to do business all around the world.
It would have to be able to integrate with apps that customers already work in. Whether you're using Facebook Workplace, Slack, Office 365, Salesforce, NetSuite, you don't want to have multiple information or content repositories in all of those platforms. You want to be able to work across any application and have one source of truth for that content. Finally, it would have to be designed for all of us. It'd have to be designed for end users to be able to just instantly work. It would have to ensure the security, compliance, and governance and protection of data, it would have to be open and interoperable with everything I'm using, developers would have to be able to build on it. That's really, really hard to find the sort of intersection of technology and product that can support those three different constituents.
This is what Cloud Content Management is. It's not a place to store files and share files or access files. It's not just a place to do workflow around content or to govern it. It's one platform that can solve all four of these sets of use cases and customer needs. What we've been building at Box is the leading Cloud Content Management platform. It starts with content, you layer in things like metadata, so I can understand more context around that content. We add collaboration, so I can share that information. We do lightweight workflow, now with Relay, much more extended and advanced workflow, that lets me work with my information.
That's only the center of what we do because as you know and as you've been seeing over the past couple of years and what Stephanie mentioned is we've become a multi-product company. We take the core of that content. That's what most of our customers are using the basics for. You want to layer on additional services and capabilities. I think everyone in this room knows a bunch of these already, but things like Box KeySafe, so I can control the encryption keys for my content, Box Zones, so I can do multi-data residency, protection policies, which is really included in the core administration experience, Box Governance, which we now have over 1,000 customers that have purchased Box Governance.
Now I can do data retention and document policies, compliance, which we'll get into a second, but obviously critically important for our customer base. Ultimately, we want to give you unbelievable analytics and visibility into what's happening with your business information. We want to give you all new insights into your content. That is Cloud Content Management from Box. We're incredibly excited that within this space and within the competitive landscape, we've been able to continue to stay ahead of our competition, when we think about how end users and how businesses are going to share, manage, and work with their information in the cloud. We're really happy about the leadership position over the past decade that we've been able to develop. Over the past we've been extending our enterprise capabilities even further.
That was just a snapshot of this past, what this conference is all about and what, obviously, yesterday and today are all about is how do we take this technology even further. What we've updated customers on is a little bit on the enterprise side and what we want to do to help make sure enterprises can manage, secure, and govern their information, in the best way within the Box environment. We are going to be updating an all-new administration console, which just helps customers keep track of the information and users within their business so that way they have way better controls and mechanisms. We have a new end user feature for administrators called Box Insights, that we'll be rolling out with that early next year. This is about giving you sort of an analytics dashboard of just, again, unprecedented visibility into your information.
We still want to give all of our reporting and event logs into any system that the customer chooses. If they want that data to go into Splunk or some other environment, that's totally fine. We also want to make sure that they have a really powerful view of how information is being used within their enterprise that's tuned for collaboration and content management use cases. As I mentioned with Box Governance, this product has been incredible for us. It was our first add-on product, and it's something that we think is universally applicable for all customers.
Really any company that is 25, 50, or 100 employees on up, as soon as you have a couple lawyers within the organization and you need to be able to manage that data, we think Box Governance is going to be highly applicable for the archival, for retention policies, and we have some upcoming functionality coming out that we're really excited about as well that customers have been asking for. Metadata-based retention, and then we're thinking about how do we bring machine learning and other intelligent features to let you do things like smart archiving in the future. Box Governance is really the sort of case study for our multi-product strategy and something that I think Stephanie will also talk about is how do we make sure on the go-to-market side, we're able to build out and sell these new capabilities as seamlessly as possible.
We also want to make sure that we can help our customers do business in any region around the world. This is obviously incredibly exciting for international customers, but it's equally important for any company in the U.S. that's doing global business or has a customer base that is doing business globally. That's our Binding Corporate Rules, and we're also preparing for GDPR certification, so all of our customers will be protected in that environment by May of next year. We have HIPAA compliance for healthcare, FINRA for financial services, PCI for retail, FedRAMP for the federal government. We continue to ratchet up the level of FedRAMP support that we have. Then one that we're really excited about that has really been driven by customer demand is GxP that we're working on in beta right now, and will be introduced to customers in Q4.
We believe in fiscal Q4, we will be able to sell GxP to customers. That's very exciting because right now we're in Pfizer and Amgen and Eli Lilly, AstraZeneca, many other life sciences leaders, but it's really been for the end user, content, sales materials, collaboration data. We want to be able to help customers store more and more of their regulated content in the cloud and then integrate with the rest of the ecosystem. You saw again on stage, Medidata and Box together sharing that future story. It's not about Box sort of controlling everything, but definitely handling the content management within the life sciences space. This is just a snapshot of some of the compliance efforts that we've driven.
There is not an industry, there's not a market, there's not a geo that we're not thinking about, that we're not trying to pay attention to in terms of the compliance efforts that we can help support. Then, of course, you need multi-data residency to help customers. This is a great example of architecture driving strategy and strategy driving architecture. We made a decision about four years ago, maybe five now, which said, as we go international, as we go global more and more, customers are going to need us to store their data in the region of their choice. We have one of two options. We either build out a lot of data centers ourselves, or we work with the public cloud and key partners to help do that.
We built a fabric that basically abstracts away the software that we build at Box from the hardware and from the infrastructure. That to customers is called Box Zones. What that is letting customers store their data in IBM Cloud, Amazon Cloud, then as we announced, a big partnership with Microsoft, back in June, then we had Scott Guthrie on stage just yesterday talking about what this looks like. We can store data and we can house information in the aggregate of all of the locations where our public cloud partners are located. These are the regions that we built out for so far, but there's nothing technically in the way of being able to integrate with any of the regions. We just go with where the customer demand is, and that's what sort of drives our roadmap.
Box Zones is all about making sure that customers can store the data that they have in the location that they need. One cool feature that's going to be rolling out next year is the ability to have multi-zone support within a single enterprise instance. If I'm a GE and I'm doing business in 30, 50 countries around the world, I'm going to want to have multiple zones within one enterprise as opposed to having to replicate enterprise instances to manage that. Speaking of Microsoft and IBM and other partners, we obviously can't deliver our value if we don't have an incredible partner ecosystem. Neil's going to talk a little about what that looks like in the cloud era. What does architecting a platform-driven company look like? These are some of the enterprise partners that we're really excited about.
Again, we had Scott Guthrie on stage yesterday talking about really the future of the Box and Microsoft partnership. This is something that has been a complete change, I think, for both of our organizations. If you go back four or five years ago, we were mostly competitive with Microsoft. Then we started doing integrations with Office 365. Then we started going deeper with Windows. Now we're going to be going pretty deep with Azure and give customers the choice of being able to have Box run with Azure, which is creating a co-selling relationship and opportunity for both Box and Microsoft together. We're really, really excited about that. Those are some of the enterprise updates. We think about Box as serving three key audiences, I mentioned in that earlier slide.
We want to serve IT, we think about IT as security, compliance, really all of the enterprise-oriented professionals in the organization. We want to serve end users, we want to serve developers. These are a lot of the enterprise innovation that we've been driving. We're just getting started, and at BoxWorks, it's all about how do we continue to take our technology and evolve it so we can solve the future workflows, the future use cases that companies have around working with their information. I'd like to bring up Jeetu Patel, our Chief Product Officer, to share a little bit about, probably more tilted toward the end user, as well as some of the workflow side and what customers are going to be able to do with our platform.
This will encompass the two sets of announcements of today and yesterday that we made to the market. We're really excited. Jeetu, come on up.
Thank you.
Thanks.
Thanks, Aaron. For those of you that don't know, I've actually spent about 25 or so years in content management, it's a long time. I have to say that the next five years will look completely different from what the past 25 have looked because there's a confluence of different factors that are starting to come together that really help us kind of compound the value of information. I'll walk you through some of the announcements we've made, some of the innovations we've had, and it's super exciting to see how the possibility is almost limitless and the way that people are starting to think about us as much more as a platform where a lot of the ideation is actually starting to originate from the customers.
If you saw today's keynote, all of those different variances of how people use the platform, those all originated from the customer, and then we're just going out and making sure that those The initial spark, and then it takes off in very creative directions. What we've announced, there's a couple different kind of big categories where there was meaningful amounts of innovation that was made. On the work smarter side, which is, how do we go out and help organizations just be a much more kind of efficient, effective, productive organization? We had three major kind of categories of announcements. One was kind of making collaboration much more productive in Box. What we wanted to do over there was make Box a place where when people are going out and collaborating and using content, that they don't have to keep leaving Box to do it.
They can be in Box and actually have a very collaborative environment. We had a bunch of announcements, some on the web application side. This is where if you start seeing like, these might seem like kind of constant improvements, which is the goal, where every single time a customer comes into Box, they're just starting to get delighted about the fact that there's constant improvements, and they can do things in a much better way. We announced things like real-time commenting, now you can have threaded conversations and comments around a document. We also announced the capability that is going to be around visual version history, you can go back and forth between different versions in a much more kind of seamless manner, and kind of much more on that one dimension. We also have a very strategic product called Box Notes.
What Box Notes allows us to do is provide secure notes in real time that teams can go out and collaborate with. It allows them to kind of fundamentally change kind of the culture of how meetings are run, how organizations collaborate with one another, how action items are tracked within the organization, so on and so forth. Over here, we've actually made a tremendous amount of announcements around this whole notion of working in real time, where there might be a group of people that are working in real time and kind of collaborating with one another. Our capabilities like presence detection, you know exactly who the other people are that are currently working on this note with you.
You might also have things like surfacing up whenever there's something that someone changed in a note, those notes start to crop up in the beginning so that you actually have an easier way of navigating. What these things do is they might seem like small changes, but they meaningfully change engagement dynamics within the product. You actually start to see that more and more people have a viral effect in keeping on coming back into the product, which is a huge kind of advancement. The third area that we saw, the huge amount of uptick from customers were asking us for is, this whole notion of Differences. Where I have a note that's a pretty long note. In fact, some of our customers, like GE and IBM, are starting to use Notes in a pretty heavy way internally within their organization.
What they were asking for is, it's nice to see a note, but sometimes there's someone who comes in and just changes a few things in the note. What do we do, and how do we know that? Do I have to keep rereading the note every single time, especially if it's real-time? Now what you have is this whole feature called Differences, where you can actually see just the highlighted differences in a note rather than having to go out and kind of read the entire note all over again. You can just pinpoint the differences where there were edits that were made, and that makes it much more kind of productive to work with teams. That was the first kind of area of innovation. The second big area that we've gone out and innovated in is this area around workflow.
I think this might be one of the first in the industry where two companies have collaborated. I just can't think of anyone in this particular market that's done this before. Two companies with two separate engineering teams and product management and design teams have collaborated, come together, built a joint product, and taken it to market. It's actually fascinating to see how elegant the product is from a design perspective. It also has all the domain expertise that IBM had that actually got captured in there. Box Relay is the product we're talking about, which essentially the goal of this product was, let's go out and take away routine, mundane, repeatable tasks that people do on a regular basis, and make sure that you can take out the friction from those tasks.
Our, everything from legal contract approvals to HR onboarding, to going out and doing kind of marketing content reviews, things that we do on a daily basis that we either have a very archaic process for or use email where things kind of constantly get to be pretty inefficient. How can you make sure that you can streamline those processes in a very lightweight tool rather than having very heavyweight tools? The way that we've actually seen workflow in the enterprise thus far, is it tends to be pretty overly complicated. You need a PhD to go out and even create a workflow, then let alone go out and execute it. It's just overall pretty inefficient from a task management perspective, and routine tasks don't really get eliminated.
What we've done with Relay is fundamentally kind of automated this process where there's three major differentiators that you can start seeing, that there's a wide space in the market where there's no one going out and attacking those differentiators. One is the workflows that we build can be built by anyone in the organization, not just the administrators or the technical people that are building out the workflows. Anyone who, you and I, as we're working together, we want to go out and just make a process more automated. You can start building out a workflow. That was the first kind of differentiator.
The second one is, which is a huge differentiator for our company, and I don't think it's very easy to replicate because of the level of kind of changes you'd have to make in your entire business model to have this, is the notion of including the extended enterprise. The extended enterprise is not just about a few capabilities that you can go out and have for sharing content with someone on the outside of the enterprise. It fundamentally requires a different business model. You have to think about your commercial terms differently. You have to think about your pricing differently. You have to think about how you engage customers and deploy customers to a very large scale in a very different manner.
What we've done is we've taken that benefit that you get with Box on being in an extended enterprise and moved it over also to the workflow side. The third area that's super kind of valuable is all the security compliance benefits, all the content that's in Box. You now actually have this capability for workflow that's built on Box itself. It takes advantage of all the capabilities of Box. It was built very specifically for Box. If you start thinking about what the traction is we've gotten, we've got about 250 customers in beta. This was one of those products where we wanted to be very deliberate because we were kind of charting new territory here.
We were working with a partner and making sure that we were building a product with the partner, and we wanted to make sure that we actually baked it enough so that there was no surprises or kind of minimizing the amount of surprises as you take the product and bring it to market. I have to say, remarkable feedback we've gotten back from our customer base as they're starting to use these products. 250 customers in beta, great input that they've given us over the course of the past year, and I'm delighted to say that it's slated to be available November 13th. We'll actually have workflow that's going to be available in the market for lightweight, repeatable tasks that can be done in a pretty structured way.
If you saw the keynote yesterday, you would have seen Jennica show kind of a spectrum of different kind of use cases from two-step processes all the way to some pretty complicated and sophisticated processes that were all being addressed with Box Relay. That's the second set of innovations that we made was around workflow. Make sure that the workspace for collaboration and how people work in Box gets more and more kind of immersive in experience. Make sure that you can go out and work with people and have the fluidity in the way the work gets done. The third area is where I feel that there's going to be a tremendous amount of innovation in the market, and I think we are charting the way over there.
This is probably one of the most gratifying areas of feedback I've gotten in the past couple of days over here as well, because all of a sudden, what this announcement on the intelligence side has done is the light bulb's gone off and people saying, "Oh, this now makes a lot of sense, not just from a defensive perspective to put my content in Box, but now from an offensive perspective. If I want to go out and do something completely different with my content, my first step is I have to move the content to the cloud and into Box.
Once I do that, I'm going to start accreting value at a very different pace than what I could do otherwise." Over here, what we've seen is the core problem that we're trying to solve over here is that the volume of content is actually increasing. As the volume of content, in fact, we are actually fortunate in the sense that more and more people are putting more content into Box, and now we are starting to see that our volume kind of double every year. As that kind of volume increases, traditionally in most systems, what ends up happening is the more information you have, the harder it gets to go out and do things with the information.
What we've seen as complaints sometimes is that you might see in the industry is a marketing professional might say, "I don't really know how to go out and find the exact image that I want to use for a campaign from the 10,000 images that I have." A legal department might actually have very expensive lawyers and paralegals updating metadata manually. You might have someone in the customer service call center area that really has to go out and listen to a lot of recordings to really assess how they're going out and serving their customers. There's a fair amount of complexity where the value is just not getting extracted from content to the level of degree that you feel it should be extracted. This area that we saw is a huge opportunity for us to go out and add value.
We feel like machine learning is what's going to go out and completely change this at scale, because what ends up happening, if you have a few pieces of content and you want to go out and extract value, it's pretty easy to do by manually entering metadata and enriching the content so you have more context around the content. For that you can build a good metadata system and you're in good shape. The challenge happens is when you actually start working at scale, when you've got billions of files and hundreds of thousands of users and there's petabytes and petabytes of data, you start finding this to be a very difficult problem to solve. You can't really solve it with just having people manually on data entry floors.
What's ended up happening in this industry, in the content management industry with my previous employers, is you tend to have very spotty kind of treatment of intelligence and metadata that's been put in the files. What we actually seen is there's so much innovation that's happened over the past couple of years, specifically in the area of machine learning, where some of the capabilities of machine learning have matured to a point where you might be able to actually use these in some very creative ways. For example, automatically translating a document from one language to the other, or automatically detecting objects within an image, or making sure that you can transcribe a document from voice to text. Those areas have actually started exceeding the human thresholds of accuracy.
What you're starting to see is you've got billions of dollars being invested in these AI algorithms. Those algorithms now are starting to get more and more sophisticated, where the accuracy is getting greater. The challenge has been that as all of this innovation has happened, there's no easy way to bring that back to your content. There's innovations happening in the AI world, then there's your content repository. Imagine if you had to go out and say, "I'm going to bring the artificial intelligence kind of capabilities to my content." What would you need to do? You'd have to go out and first identify which AI algorithm might work for you. You might have to go out and do a security review on those AI algorithms.
You might need to then make sure that you figure out whether there's interoperability between that AI algorithm and your system, and how is that going to work. There's a fair amount of complexity that most large organizations aren't able to take on. What ends up happening is you just have this very unproductive strategic asset within your organization, which is content that doesn't get used. What we've tried to do over here is, I think it would be very hard for a company to do this unless they were very kind of ecosystem-centric. Because we've had such a partnership, now what we can start to see is there's a big change and a big shift in how you can go out and add value to content.
We introduced, as many of you might have seen in the past couple of keynotes, this whole kind of concept of Box Skills, where you could take machine learning, and intelligence from kind of the different providers in the market and build skills that can then be applied to your content. You're bringing intelligence to your content to make sure that your content gets more and more potent, and you can extract more and more value from it. The way that we've actually thought about this is you want to make sure that the velocity of innovation that's happening in the area of machine learning in general, which is probably an area that there's more investment dollars being put than any other kind of sector in tech, can we use that as a tailwind for us, right?
All different technologies that you see, from Azure to IBM Watson, to Google that are doing some pretty sophisticated stuff. I can go out and detect a sentiment based on tone of voice or what they've said. I can go out and make sure that I identify what an image is and how you want to classify the image. All of those kind of algorithms, we've taken those, and we've bridged the gap between that and how that can be applied to content by building this thing called the Skills Framework. The Skills Framework allows us to take those machine learning algorithms and apply it to the content in Box, where the goal over here is that every piece of content, when it's in Box, is infinitely more valuable for you, the customer, than if that same piece of content was outside of Box.
What that does is creates an incentive for us to go out and continue to create more value, but creates an incentive for customers to say, "Let me put more content in Box, because more I put my content in Box, more value I can extract from it." What we wanted to do was identify a few ways that we can have people start imagining what they can do with their content. We are providing three skills, as part of this announcement, which are the Image Intelligence Skill, the Audio Intelligence Skill, and the Video Intelligence Skill that'll be actually provided as part of this entire experience.
For those of you that might have missed the keynote, what we show over here is kind of a remarkable thing where there's a marketing department, let's say, that's got tens of thousands of images of marketing assets, for digital asset management use case of some sort. What you'll be able to do is on the left-hand side, what you see is that's not someone who's manually tagged all of that data and said, "This is about tennis, and it's about shoes, and it does have New Balance shoes in the image." What we've done is we've identified specific objects in the image and the context of that image through a machine learning algorithm, and that got automatically tagged.
What we also did over here in this particular example is took the text that was in the image and extracted the text and also populated the metadata. What you're starting to see over here is that your metadata is automatically at scale, going to get populated through these machine learning algorithms. Now the possibilities get to be limitless because you could literally go out and say, "Show me all images in my marketing repository which have a green background, that are talking about tennis the sport, which have a New Balance kind of shoe that's actually placed over there." Pull all those up, and from the 10,000, I might have 35 of them that I can pick from and then go out and run a campaign against it. It fundamentally changes how you can go out and surface up content in very different ways.
We started with image because there's two reasons we started with image, audio, and video. One was because that's an area where we are seeing a huge amount of growth in our content repository, where image, audio, and video is constituting a large percentage of growth. The second area is, there's a huge amount of progress that's made with these machine learning algorithms in the accuracy levels for these particular type of domains. The second example is video, where this is one of my favorite examples in how people will fundamentally change the way they interact with certain types of content. Because you've taken a very linear motion of how you would consume content, which is the way that people can consume video today is you start at the beginning Then you watch the video all the way to the end.
If you're impatient like me, you might actually randomly fast-forward. What you don't see is things where it's done in a very intelligent way. What we've done over here is, we've identified the tags for the video, and these might be tags like there's a student or all the tags about the topics of the video will be identified. We have algorithms that are going out and doing facial recognition frame by frame on every video. You can identify which people appeared in what frames of the video. These are interactive, so you can then go out and click on something and say, "I want to see John in this video," and I can just click on the area where John's going to appear, and you'll actually be able to see John in the video.
Down at the bottom, you see a transcript that's automatically done. None of this was manually done. That's the magic in this thing, is it's all automatically being processed through these AI algorithms. What you've done is you've taken something that was extremely complex, and made sure that you've made it a very intelligent document, where it's no longer a black box, but it's become this intelligent piece of content that you can consume. Our thinking is that you actually have These are some great examples to start with, but most of the innovation is going to happen with custom skills, where we want to go out and provide to our customers an ability to build new skills that they might think about that they want to apply to their content.
What we wanted to do was provide them with an SDK, and we call that the Skills Kit. You can take the Skills Kit, and build out your own custom skills, from any ML provider. The goal over here is whoever you think is a great ML provider that might be able to apply value to your content, you can take that ML provider, you can go out and use our Skills Kit, and then start applying that capability to your content, and you take out all the friction from there. This is an example where we took an audio file and chained a bunch of skills together.
You might say, "I want to go out and use Microsoft for the transcription of the audio to text, but I'm going to use IBM for the sentiment analysis, and I'm going to use Google for the translation." You could literally chain three skills together and make sure that possibilities truly get limitless, where if you start thinking about what this would hold in the future with, as natural language processing gets more effective, is like, the way that we interact with content will just start to get very different.
In this particular use case, what happened was a call center or customer service rep, rather than just listening to a recording of one of their employees, and how the call might have gone, you can listen to all of the calls that are there from the machine, and you can figure out, at what points in time did a customer service or support rep say certain things that created different sentiments for our users? It might be that at these points in time, when you said this, the customers got happy in general. Or when you said this, the customer was frustrated. You can then use that for also training your entire kind of teams. These are all kind of things that you can do in a custom way.
One last one that we've actually gotten a lot of interest from the market is this whole notion of, as we displace ECM systems, how do you go out and make sure that text and OCR recognition happens in the proper way so that you can kind of classify content that's text documents? This was an example of a partner, Ephesoft, that built a skill where you could literally take a mutual NDA document, and this NDA document has been tagged as a kind of mutual non-disclosure document by the skill. What you also have is it detected that there was a wet signature at the bottom of the document. Based on that, it actually flipped the flag to say that this contract is now executed because there's a wet signature on the document.
Your content just becomes more and more intelligent as you go. Then it's also extracted who signed the content and what the address of the actual piece was. This, literally, if you would've thought about this before the cloud, you just wouldn't be able to bring all these technologies together. The pace at which we can go out and build these skills is actually very scalable because you'll have all these different algorithms that are continuing to evolve, but the algorithm's only as good as the dataset that they can be applied to. We've got one of the world's largest kind of private datasets that our customers own, that we want to make sure that we keep applying to it. Then one of the things that's pretty important is the guiding principles that we use for skills.
The way that we think about this is, there's a lot of concern around how can machine learning be applied where it doesn't go out and hamper my privacy or security. I feel like, with the Box brand of being very secure, very compliant, we can actually have a level of assurance that our customers have, feeling that they don't have to worry about their data being misused. One of the key guiding principles that we make very public is that any skill that you build or that we've built in the product, is going to have an explicit opt-in kind of component to it. The customer has to explicitly opt in, saying, "For this set of content, I want to apply this skill." It won't be turned on by default.
We will make sure that the customer explicitly opts into it for maintaining their privacy and security. We also want to make sure that all the benefits of security and compliance that you have in our content are automatically Just because it is in the Box repository and you are bringing the intelligence to the content, it becomes super valuable to kind of leverage the security and compliance. We want to take out all the friction. As these ML algorithms get more sophisticated, you can even expect over time that there could be a marketplace that gets built out where you will have more and more skills, and people will want to make sure that there is a place that you can go to for the skills so that the level of friction can get taken away from the market.
That was on the skills where, how do you go out and get the most amount of value from the files? That was one part of our kind of intelligence launches that we did. The second area that we are actually innovating a fair amount on is this whole notion of how can you also get more insights of what is happening around the file? For that, we have actually got this kind of a set of relationships that can be leveraged, where we actually have a lot of data around relationships, the relationship between two pieces of content, or relationship between a content and a person, or a person and person. There is a fair amount of relationships that are there within Box.
What we have done is we have actually created the ability to say, how do those relationships get interpreted, and how are the interactions going to get continuously updated within our system? We want to continually make sure that we are enhancing and using inputs from the outside to enhance these interactions that either content and people are having with one another. For example, you could even go out and say, I had an input of a document. I had a document that was uploaded to Box from Slack, or I had a document that got edited in Office 365, and those become inputs into this kind of organizational map that we have created. What that does is it continuously keeps improving as you actually use the system more and more. Right?
What we have also built is we have developed a scorekeeper service that then also has our own machine learning algorithm that says, what is the weighting that you place on different relationships based on the way that the work gets done? That entire technology is what we call Box Graph. What you will have is this whole notion of Box Graph will start powering a bunch of experiences in different domains for our customers. One of the things that we launched yesterday was this whole notion of, in productivity, what can we do with it? The way that people have historically worked with content is you either browse through content, or you search for content. That is where you kind of stop.
That's when you got to a certain level where you couldn't browse through content, you searched for content. Wouldn't it be nice if you could actually recommend content based on certain kind of preferences or contextualization or kind of predictive behavior that you can go out and assess? That's an area where we announced a product called Box Feed, where you'll be able to use the graph and power experiences for saying, oh, I just had a customer meeting, and chances are that Aaron is probably interested in the notes from the customer meeting. Automatically, the graph knows that Aaron and I work closely together, so that customer meeting notes will actually just surface up in Aaron's feed. Or we might have something like, I've actually been @mentioned in a document, or I'm actively working on a document.
Wouldn't it be nice if that document, when someone else updates it, that also starts surfacing up in my feed so I know that this was something that I had edited or I had commented on, but it's been seven days and now someone else edited it, let me just have that show up in my feed. The system just gets more and more intelligent, and we see that this kind of possibility is not just Feed as the first application. We announced Feed, we'll actually be launching it next year, but there'll also be a bunch of other applications in areas of security, for example, where detecting anomalies for anomaly detection use cases or threat prevention would be a great area where this graph could be utilized.
In fact, we had Palo Alto Networks today in my keynote earlier that's talking about building a skill for going out and making sure that that can be applied to content. Workflow, how do you automatically kind of surface up some tasks? Lastly, insights from administrators so that administrators know the pattern of the way that work happens internally and what value they're extracting from the system. One of the things we want to do with administrators is equip them with enough data to make them our champion so that they can continue to keep justifying Box for their senior management as they go forward. You've got this way to go out and surface those insights to them as well. Super exciting on kind of different dimensions. The beauty about this is all of these innovations are on our platform.
The moment you actually use our platform in any different area and put content into the system, you automatically are a beneficiary now that you can go out and leverage all of these other capabilities because you've put content through any of our channels into the platform. The way that we've built out our platform is we've got a core set of content services and then a core set of enterprise services so that every single time people think about going out and using content, they don't have to rebuild their platform. They can rely on the fact that we've already figured out how encryption works. We've already figured out how permissioning works or how collaboration works.
That'll be something that they can just rely on us and then focus on what they do best, and then rely on us for the infrastructure for content and the plumbing, that we can become the fabric for content within kind of companies. The last thing I want to kind of talk to you about is how the APIs in our platform are being used by our customers. Because when we started thinking about this, we had a few ways that we thought the APIs would get used, but we've been really pleasantly surprised with the breadth of ways that APIs are being used by our customers.
What we showed in today's keynote, for those of you that made it, is in every single one of these different ways that APIs got used, we actually had someone that came up and talked about it, and there were customers like Walmart and Standard & Poor's and all of those that came up. There are different ways that the APIs are being used. One is through our first-party apps. Second is by third-party app integrations. We've got thousands of integrations now, where the point over there is, regardless of the application you're working in, you should be able to work with content in Box. The third area is security services integrations, where Palo Alto Networks was up there. Facebook was there showing the third-party app integration with Workplace. We've also got this automated kind of automations and scripting for an administrator.
We had Indiana University come up over there and talk about how they've got 115,000 users that are using our APIs and automating the deprovisioning, because in the education sector, you actually see a lot of students leave the university when they graduate, and new ones come on. They have to automate all of the provisioning and deprovisioning. Back-office line of business systems integrations, and retiring certain systems and moving them over. S&P Global came up on stage and talked about how they retired Documentum, Syncplicity, Microsoft OneDrive, and moved all of the data to Box. They had over a 6,000% increase in the content that's happened in Box, and they've actually got over 11 and a half terabytes of content or so now that's in Box.
Now what they're really excited about is how can we leverage this with all the machine learning capability to extract even more value. Walmart came, they showed an example of an application for learning management system, learning academy that they have with quarter of a million users. It was actually great. I didn't even know she was going to say that, but they're thinking of continuing to expand the footprint over there. What they've done is they've white labeled our capability into their application. Their learning management system, it doesn't look like Box at all, but all the capabilities for serving up content, actually powered by Box, and so 250,000 users over there. Then external apps where you start seeing a bunch of financial services companies, bunch of healthcare companies, and across a multitude of industries that are going through a digital transformation.
We had one of our largest kind of commercial deals, was Freedom Financial that came up on stage, and their CEO was up on stage and talked about what they're planning on doing with Box. Lastly, just machine learning kind of services with a skills framework. This is kind of this range or spectrum of ways that people are using our platform. What happens is, from any of these ways that you use the platform, you put content into the system, it goes in the same place where policies are managed in a singular kind of manner and in a consistent manner, so that regardless of where you put the content in from, you now have this kind of very rich single place where your content is kept, it integrates with everything that you might want to work with.
With that, I'd say that to end, we actually have very different kind of use cases that you're starting to see where, whether it be from rip and replacing ECM systems, like what Standard & Poor's talked about, to competitive wins against ECM. We had Metropolitan Police where we actually, they were using SharePoint, now they're going to be using us. Storage replacement, where they actually retire storage. Lastly, expansion from EFSS to multiple different workloads. You're starting to see a huge amount of momentum. We think this is about a $45 billion market. We'd like to make sure that we take our fair share in the market.
The nice part about it is there's been so much friction in this $45 billion in the way that it's been served that we feel like there's someone Probably one thing I'll end with is the uniqueness of the level of desire that customers have in us succeeding, I've never seen at any other company in the past. They just want us to succeed because they've been so fatigued with how poor the innovation velocity has been in the past. Hopefully that gives you a little bit of an idea on the product side. With that, I'll actually have Neil talk a little bit more about the partner side of the house and the ecosystem, which is central to our success as we move forward. Hopefully that was valuable.
Great.
Thank you.
Thank you.
Thanks, Chad.
All right. My name is Neil, and I'm going to focus more specifically on the subset of our ecosystem. We've been doing a lot of interesting things. You might have seen some announcements with some of the big players, IBM, Microsoft, Google, Amazon. I wanted to just zoom back for a second and give you some context on why this is happening right now and why it's good for us, good for our customers, and also just to give you a brief update on how those are going. Again, this is nothing that you don't already know, but if you think about the first wave of movement to the cloud, a lot of it is about refactoring. It's moving licenses. It's like Office 365 replacing Office on-prem. It's the Oracle ERP stack or FinApps moving into the managed hosted environment that is in the Oracle Cloud.
That's really where the most of the spend today is, and most of the initial wave of movement into the cloud is going. It's not really true, SaaS is not leveraging the full power of what you can do with the cloud model. Right now we're seeing an interesting trend where customers traditionally would go into the vertically integrated stacks. Now they're like, "Okay, there's single purpose SaaS applications that get the job done," like Workday and HCM, Box and Cloud Content Management. This is like the current state. A lot of these applications are moving into these single purpose SaaS applications. It's a big market. It's a trillion-dollar market. We all know it. It's growing very fast. What's interesting is Box is in a very unique position right now.
On the right-hand side, you can see the top five deployed and used SaaS applications in the world. Right. If you can't see, it's Office 365, Salesforce, it's Amazon, Box, and G Suite. What's interesting is, of the four others, they don't particularly like each other. Right. When it comes to sharing ML services, for instance, a lot of these companies view what they're doing as very specific to their own workloads. What we're actually focused on is we're agnostic to all of these. We have partnered with all of these companies and many others on this list, where we can actually bring the capabilities of the ML services or the advanced analytic services of some of these other companies into our system, in a way that some of these others cannot.
We're in the unique position because we have large amounts of very valuable data. We have the ability to use and learn from that data in a very unique way. The interesting thing is that this data is not static. It's very dynamic. We can see the intersection, as Jeetu talked about, between people and the workflows and what the transformation is going on with different data sets. I'd like to just give you a. I was at an EIC last night with one of the top three oil and gas exploration companies in the world, and they're a deep, in fact, they're one of the top Microsoft customers globally.
Traditionally, the conversations have been, "Hey, how are you going to take cost out because we got OneDrive or we got SharePoint, so why would we use Box?" What was interesting was they said, "Well, one of our biggest pain points is that we have decades of research, and to replace costs, we put it into SharePoint. The problem is that the researchers can't get access to that." Or they want to be able to use the ML services that actually might not come from the Microsoft stack against that research so they can innovate faster. We're seeing time and time again, these customers who may have invested in other technologies, but they're like, "Okay, now I can see the productivity improvements that I get", so you completely change the dialogue that you have.
We're just seeing that beginning with some of the announcements with Skills. What's fascinating, though, is all of these big companies, they understand that. There's this interesting arms race going on where they not only want to power the storage layer, the compute layer, the network architectures, but they also want to use their advanced services on top of these single-purpose SaaS applications. Again, because of Box's scale now, we are deeply relevant in a way that we were not before. We've decided to push as much of our infrastructure as we can into the public cloud. There are other companies in our business who have actually gone in the opposite direction, and time will tell to see what happens. It's a win-win-win for all of us, from a customer, from these companies, and certainly for Box.
From a customer perspective, because we can leverage the innovation that is going on by these other companies, we can accelerate how we can transform our customers' journey into digital. We have the flexibility to deploy or mix and match the best of breed SaaS or ML and AI capabilities in a way that many of these other companies cannot do. I can't emphasize enough how difficult it is for a customer themselves to actually go and to set up the technology to develop the relationships, the partnerships to consume the different ML services from each of these companies. It's really difficult to do.
Now what we can do with Skills is we have the ability to do that across all of these, but not only get the intelligence, but to drive outcomes, because intelligence is irrelevant if metadata is just sitting in a system that has not been used. If we also saw what we did with workflow, this enables us to drive actions based upon the intelligence within a dataset. It's also by working in public cloud, we've been able to accelerate our international expansion and growth, because now we can actually leverage the capabilities of the different players for different regulated industries or specific countries in ways that we have not been able to do before. Working with all four, we now have the ability to just very quickly move into a new market or even have different zones within country in a much faster way.
Finally, our performance is getting way better because we're just riding the wave of the infrastructure investments that these other companies are making. I think about this, I run BD here, I think about what is the benefit for the companies themselves. It's actually, there's some interesting things going on. First of all, it's super important for these companies to actually be serving multi-tenant or scale SaaS applications. Behind the scenes, we are helping these companies who are actually, some of them are just purely doing movement of applications for on-prem into single tenant for their customers in managed service environments.
When it comes to actually serving hundreds of thousands of customers at scale and entrusting their data, there's a whole bunch of innovation that is going on behind the scenes, not just on the technology, but even just the regulations, the legal contracts, the way you structure these things. We're just helping some of these companies really harden their ability to serve scale SaaS applications. We are also helping to sell the differentiated and advanced offerings of these companies. They're building like a Google, Microsoft, Amazon, they're building these incredibly sophisticated algorithms. However, it's hard to actually figure out how best to get this into hands of customers to drive some transformation. That's actually working with us, the ease of use and the core tenets of what Box does. We're actually helping them accelerate that.
Of course, for us, we have seen a deepening relationship with all these companies. What we get out of this is that we can tap into the go-to-market reach of these companies as they're serving, and I'll share some examples of this in a moment, but these companies have got deep, decades-long relationships, some of them, with enterprises. We're just basically, because we're now the cool, we're the new, we're the innovative, we're actually helping these companies provide some value to these, and that, of course, is beneficial for us. We also are able to, I talked about this, rapidly differentiate Box services. We're able to mix and match best-of-breed technologies over the top from these other companies. Of course, it gives us greater economies of scale and efficiency. When you're receiving infrastructure from multiple players, you can negotiate better rates.
We've certainly seen some improvements, Dylan will talk about that when we get into the financial section. How's it going? I'll just share a couple of perspectives. I'll talk about IBM and Microsoft. We see these strategic alliances in two categories. One of them is go-to-market reach, and the other is joint innovation. IBM, we've been doing this for slightly over two years. They're jointly selling, they're reselling Box to their customers around the world. That means that there's thousands of sales reps who are heavily incented for Box's success with their clients. That's actually just an amazing position to be in. We're seeing strong lead generation. In fact, over the last 18 months, we've over 50 deals over $100,000. We're just at the beginning of this. It's a long-term relationship. We didn't do this just for go-to-market reach.
IBM, for instance, are the leader in traditional on-prem ECM with the FileNet business, and they have just deep, decades-long capabilities and customer relationships. Box Relay, we talked about earlier, is a joint development between both companies, where we're bringing the capabilities and the depth of knowledge of the workflow, legacy of IBM with the design and the ease of use characteristics of what you would expect from a company like Box. We're GA-ing next month, and we're seeing a lot of interest from all over the world, from customers in every industry on this. It's going to be really interesting, especially when you're marrying it to the intelligence in Box in Skills. We also announced that we're using Watson as one of the core tenets of what is behind Box Skills.
Of course, we've been very busy over the last year, and you'll see a lot more happening to turn up new zones in lots of different markets. One of the real benefits of this is that we've been able to sell into Europe, for instance, or in the U.K. specifically, for different industry verticals by virtue of working on top of IBM Cloud. Microsoft has been more recent. Aaron mentioned this earlier. This summer, we dramatically improved the relationship that we have. We have joint selling motions with Microsoft. A Microsoft sales rep will get paid when Box is deployed to their customer. Just think about that for a second. This is credit to Microsoft. We're actually getting that, it's very important for them to power a company like Box, and with Azure underneath and all of these advanced Cortana services on top.
Even though we will continue to have some overlap on OneDrive, SharePoint, in totality, we have a very deep and building and improving go-to-market relationship and product relationship with Microsoft. We're just seeing the beginning of the pipeline. In fact, we just turned up this week some of the systems to actually enable the lead sharing, which it'll be fascinating to see how that goes. On the innovation side, this is something we've been working on for years with Office 365, recently with Microsoft Teams, with Flow, Outlook, SharePoint, Azure. There's a lot of integration, and you'll see a lot more of that. We also announced with Box Skills. That's going to enable us to bring some of the Azure ML services into Box content. Finally, zones.
Microsoft actually are one of the more robust public cloud infrastructure players with breadth of reach around the world because they're serving the hybrid use cases of a lot of customers. Because of that, they have got a very sophisticated set of compliance standards. In fact, they would argue it's the best in the world, and we're actually very encouraged with what they're doing there. With Google and Amazon, we're also doing a lot of deeper integrations. Last year, we announced, and we're actually now seeing in beta, and we're working with customers to actually put Box in underneath Google Apps or G Suite, which is something that a lot of our customers are asking. They want to have the ability to have flexibility to use Box, whether they're using the full Google shop or maybe they're a mixture of different productivity tools. That's actually progressing quite well.
We also have announced, and we're now in beta with the integration to some of the Google services on the ML side. Last but not least, Amazon. We've been working with Amazon for over a decade, and we've done a lot of joint innovation. We've scaled with Amazon, and we continue to work deeply with them. We partnered deeply to do KeySafe, which was one of the first innovations of its kind in the industry. We're deploying multiple zones, and you would imagine us as doing a lot more as Amazon moves into new parts of the ecosystem. These are only four. We are partnering with over 3,000 companies to amplify our differentiation and to accelerate growth. With that, I'm going to hand it back to Steph, who's going to talk about how the partner ecosystem is integral to our overall go-to-market motions.
All right.
Thank you. Good afternoon, everyone. Lovely to be here. I'm going to put my glasses on so I don't go blind. Lovely to see everyone. It's great to have an opportunity to spend a little bit of time giving you an overview of what we're doing from a go-to-market perspective. Let me jump in and tell you a little bit about myself. I'm sure you've all seen the bios, et cetera, but I thought I'd just share with you a few key points. I've spent my entire life living and breathing information technology. I'm an IT girl at heart, and I've been fortunate enough to work with some of the world's leading players in what I would call pretty classic go-to-market functions. I've led everything from sales and marketing, to operations, to product teams, to global services, to consulting, to customer success, and online businesses.
A really nice span of go-to-market operations. With all companies of all sizes and shapes and across all industries, I've led a couple of industry teams over the years, spent a lot of time working in state and federal government, both in Asia-Pac and across the globe, and have held a number of global positions as well. With that comes, I think, 25 years of a lot of experience in terms of building, growing, and scaling businesses. Everything sort of from tens of millions to hundreds of millions, and then all the way up to close to $10 billion. The gamut, I call it. I see this tremendous opportunity here at Box, and I look forward to sharing with you a few of the highlights over, I guess, the last 60 days.
It's just over two months now of being here, and I've had an opportunity to hit the road, meet a lot of our customers, our partners, spend time with our teams, both here domestically and internationally. For me, three things really stood out. First and foremost, the people. There is no doubt that Aaron and Dylan and their co-founders have done an incredible job of building an organization that attracts and retains talent from every part of the globe with a really deep domain expertise across all of the functions, which I think has allowed us to build this incredible culture. Very passionate, everyone's clear on their North Star and the vision. It's really put an incredible business foundation in place.
I walked in the front door, I was very clear to both Aaron and Dylan, we have the foundation and the building blocks to do well and truly beyond a billion dollars. This is an incredible opportunity for us. We have 76,000 customers, which most people, I think, would kill for. We have many more who are keen to become our customers, and I've been meeting with them throughout this week here at BoxWorks, and they recognize that there's something very unique. You heard it from Jeetu, you probably heard it a little bit over the last couple of days as well. There's something about this technology and innovation that is very, very unique. That's why they're coming to Box.
With a $45 billion addressable market, there is a ton of opportunity for us to continue to grow, to grow our current install base, and to continue to drive the acquisition of new customers across the globe. With that, I really want to share a little bit about our go-to-market strategy. I'll tell you a couple of interesting anecdotal stories. I spent the last 48 hours probably meeting with about 80 C-suite executives from different industries, from federal government, and it was really clear. We were reminiscing, for those of us who are old enough, we've been talking about cloud for a really long time. Well, it's here. Some people are going in a very willing manner, others are sort of resisting somewhat, but there is no doubt that everyone has crossed that chasm.
Now they're trying to figure out, what does that mean for my organization, for my people, for the extended enterprise, my customers, my suppliers? They're anchoring themselves on a couple of really important things. The most important thing that comes out in every conversation I've had over the last two months is security and compliance. It is critical to every part of their organization. In light of what's happening right now with the numerous breaches we've seen over the last couple of years across all industries, it's really top of mind. When they do the assessments and the analysis internally, when they look at external consultants to do this for them, we are unmatched in this area. We'll talk a little bit more about that later on.
They anchor themselves on security and compliance, and then they say, "Steph, what we're trying to do is figure out what do we do with all this rich data and content?" They're trying to find ways to improve their collaboration within their organizations externally. They're trying to look at their business processes, rethink the way they go to market. They don't want to deal with 45 different vendors to do this. They want one strategic partner that's open, that will integrate with their legacy systems, will look at best-in-class technology that they want to continue to add to the architectural blueprint, and the answer is Box. I truly believe that as well, and I've been hearing it over and over again. What does that mean for us here at Box? I thought about it, and there are two really clear guiding principles.
The first one is we're going to drive top-line growth to $1 billion and beyond, and we're going to do it as fast as we possibly can. Aaron keeps reminding me that that's my job. The second one is we're going to do this, we're going to scale the business efficiently. I said earlier, we've got this incredible foundation and building blocks, but the wiring needs a little bit of work, to be quite candid with you, and that's what we're going to focus on. We've got to weave this with the DNA of not just our organization, but our partners and our customers. We've got a plan in terms of how we're going to do that. I think about four really clear business outcomes that are going to drive that growth and efficiency.
The first way we're going to do this is we're going to 2X and 3X our annual contract value. With the breadth of portfolio that we have in terms of the products, and you just heard of all the incredible innovation that's coming, and we'll get a little bit further insight with Crystal Ball this afternoon of what's out there, as well as platform. The customers are just trying to understand, how can we leverage this all together and really make an impact in transforming our businesses sort of on this digital journey. We're going to focus on that. The next thing we're going to do is we're going to continue to drive usage and adoption of the technology, we're spending a lot of time inside our customers, and you'll hear a little bit about what we're doing with Box Consulting and Services.
We're helping them really get the most out of this technology. There were four or five great customer case studies on stage this morning with Jeetu across all industries, financial services, retail, life sciences, government. It's never ending. We're going to continue to help our customers get the greatest value they possibly can out of the technology. We're going to acquire new logos. We have over 7,000 people here this week. Many of them are prospects who have heard about us, who are thinking about, how do we bring all these pieces together, particularly in light of the ecosystem that we're working within. Our partners are their partners, it's starting to make a lot more sense for them in terms of understanding how they really can take advantage of this Cloud Content Management platform.
Finally, we're going to do all of this by keeping our costs down. I tried to think how best to describe this to you in about 15 minutes. I thought I would group these into what I would call pretty logical buckets. I'm going to quickly touch on four of them and go a little deeper on the others. Let me start. Solution selling through Cloud Content Management product suites. What we've found is we've got this great foundation of thousands of thousands of customers who are using it for what I would consider to be really basic things, so important but fairly rudimentary in terms of what we're trying to help them do with transforming their businesses.
We're helping them understand how governance and key services and zones where they need data residency in their multinational operations become really important pieces of their architectural blueprint. We've been working with our teams and our partners in really elevating these conversations and getting in there. You can see by the types of attendees we have this week, we have line-of-business leaders, we have CISOs, we have CIOs, we have heads of digital transformation. This is the business that is talking about what's required, we're going to continue to have that dialogue. As I mentioned, Box Consulting, we're continuing to invest in this. Our customers are looking for trusted advisors to help them kind of navigate these waters, to be quite candid with you.
We are one of multiple partners within their infrastructure environments. One of the things they're asking us to do is to really give them the knowledge and the support that they need to actually integrate everything in a very seamless fashion to improve their own user experience as well as the experience of their extended enterprises. ELAs, we're going to continue to do more enterprise license agreements and multiyear contracts. We're seeing this is what our customers are looking for, this commitment to Box moving forward. I'll talk about the new use cases in a moment. I'll just drop down to self-service fulfillment. Our online business continues to be a really important part of our organization.
We want customers to be able to use any route to market that they feel makes the most sense for their business. We're making the investments there to ensure that they have access to whatever they require in a self-service manner. Our community sites provide tons and tons of support for them as well. That's a part of the business that you'll hear a little bit more about. The last two, I'll go into a little bit more detail. Let me just move right ahead. The first one is new use cases. What's really fascinating is when you speak to our customers, they're really all shapes and sizes. They're from every part of the globe. They're from an NGO all the way to heavily regulated industries like financial services and life sciences.
The beauty of Box is that we really address everyone's needs. One of the nice things that we're able to do is use that horizontal platform essentially as a springboard. What we've decided to do is to continue to focus on the industry verticals, in a little more sort of a discrete fashion where we think we have a unique differentiator to really add value and make a difference. Three of these examples are financial services, government, and life sciences. Again, if we remember that we anchor ourselves on security, we have FINRA, we have FedRAMP level 2, level 4. We have HIPAA. GxP is about to become really available. You heard Medidata up on stage today as to how important this is in terms of clinical research and what's going on.
We are looking at ways in which we can help them reinvent their businesses. In financial services, I met with two clients yesterday who were talking about how do they reduce what is currently a 17-step process for someone to get approval on a loan. We're spending time with them rethinking those processes and how they use Box as they work with three or four other strategic partners to really help them improve that workflow. With government, I think you heard earlier from Jeetu. There was a lot of press recently about the work that we're doing with Metropolitan Police of London. That's a really fascinating use case, digital policing. They were literally spending thousands of men, tens of thousands of man-hours driving across London, collecting data on thumb drives. It's crazy.
We are helping them rethink digital policing and safety and being able to solve for crime much faster. That's another example where we feel that we've got this unique opportunity to go deeper in some of these verticals that just make sense and play to our sweet spot. The next area is international. I've had an opportunity to visit with half of our international teams thus far. Our EMEA operation continues to go from strength to strength. We recently made further investments in Germany. We hired an incredible sales leader on the ground there. He has a great team, and we're already getting traction by working with some of our strategic partners like IBM.
Really having that opportunity to continue to expand the footprint outside of the U.K., where David Benjamin and the team continue to do some pretty incredible work, is really great news for us, and we're going to double down on that this year. Our Japanese business, Katsun, does a phenomenal job. It is an entirely nearly indirect business. The Japanese channel strategy is one of the most effective I've ever seen, and something that I've been very familiar with over the last 25 years, and will continue to drive that business. We've got our regional operations in both Canada and Australia. We've chosen to work really closely with some of the strategic partners we have on the ground, IBM, the telcos, Telstra in Australia, Microsoft.
This is an opportunity for us to continue to expand our footprint, and really enable the domestic clients that have multinational operations to really get the benefit of Box across the globe. Strategic partners. Neil touched on this a little bit. I just want to give you a little more depth around how we think about partnerships. We were presenting to 400 partners yesterday afternoon, and we made it very clear to them that our success is predicated on theirs and vice versa. We cannot get to a billion as fast as we want to, even if we attempted to try and hire as many sellers as you could possibly get your hands on. It doesn't work that way. I've been in this business for a really long time. You've got to go wide. It's about reach, it's about depth, and it's about differentiation.
For us, working with strategic partners across the globe allows us to get into new geographies, new markets, new industries, and we can do this at scale. Some examples of who we're working with. We have these tremendous relationships with service providers like AT&T and Telstra, who essentially cover all aspects and realms of the marketplace, and we are able to leverage their tens of sellers in front of the customer and think about how we integrate Box as part of their solutions. The same with our resellers. We have over 1,000 resellers across the world that we're working with, again, to enable us to get that reach that we're looking for in a fairly accelerated manner. If you think about depth, when I think about this is really the integration piece.
If this doesn't sound as compelling as it should be, Box won't exist without the integration piece. For us, one of the reasons why I believe our customers think it is so compelling is they've made investments in technology. They have legacy systems. They're continuing to make investments in new technologies. They want to consolidate and replace a lot of the old legacy stuff that's driving them crazy. They're looking for an open platform, products that will allow them to integrate seamlessly. This is something that Box allows them to do. So we've been really very selective about thinking through this piece of the strategy, and as Neil said, becomes critically important. If I look at our own environment and the use of Okta as single sign-on, use of Workday for HR, Salesforce, all of our customers are essentially a mirror image of ourselves.
What they're looking for is a way to bring these pieces together in a very secure fashion. This is something that's really critical to our success moving forward. Everything we heard over the last two days around Box Skills, Box Graph, this is all done in conjunction with partnerships. Really, our success is heavily predicated on theirs, and so we'll continue to nurture and develop these relationships moving forward. Finally, to this differentiation piece that Neil hit on. This is where we really start to innovate in truly transformational ways, and something that we're really excited about. I'll give you an interesting example.
I was sitting with a Fortune 100 client yesterday right after the keynote, he said, "We were thinking about Box Graph, and I think we've got a perfect use case for it." I said to him, "What is that?" He said, "Well, think about this. When an employee leaves, they leave these tentacles across an organization, and they touch so many people in an organization, we have no idea what content or what data they had their hands on.
With something like Box Graph, we now will get sort of this security alert, and we'll have an opportunity to figure out very quickly within our organization anything that's highly sensitive, whether or not this individual would take it with them or not." Our customers, as they walked out of these sessions yesterday, were thinking about real use cases that would really transform the way they did business. These partners are going to become critical for us as we continue to go deeper in this area. Finally, it all gets underpinned with go-to-market enablement and infrastructure. We've made significant investments over the last couple of years, in both the MarTech stacks and marketing technology, as well as investments in sellers and specialists all across the globe.
What I want to make sure we do is that we ground them in what I've always seen to be sort of the three key pillars for success when it comes to go to market. This is skills and training. Are we enabling them to be successful with clients and helping them take them on that journey? Do they have the right tools to really get out and speak to the marketplace about the changes that Box will bring to their environments? Then finally, there's a coaching aspect of it, which we'll continue to do. This is something we do not just for our own people, but for our business partners as well. Something that we'll continue to make investments in as we go forward. How does this all come together? Again, these are sort of the guiding principles which are our North Star.
Our teams are 150% committed. This is a unique opportunity. I truly believe that there is no one else that can really encapsulate everything that our customers need right now as they go on this journey. It's a complex environment. The CIOs on CIO Day early this week were telling us that they are struggling. They are sitting beside their CEOs and their boards, and they're trying to ensure them and give them the level of confidence that they need, that there's an underlying infrastructure in the organization around their intellectual property and around what they do, and they're looking for partners that can help them achieve that. Box is really the partner of choice. I'm really excited to be here, and I look forward to spending more time with you in the future.
With that, right on time, I will hand over to our CFO, Dylan Smith.
Awesome. Thanks, Steph. Awesome. Right on the two minutes early, even. Even better than on time. Good work. Cool. Thanks, Steph. A year ago, at Analyst Day, we said that Box was at an inflection point in our Cloud Content Management capabilities and in our financial model. Since then, we've significantly expanded our product portfolio, and we've delivered our first two quarters of positive free cash flow. Today, we've shared how Box is building the blueprint for the future of work by creating the simplest, most secure way to bring people, information, and applications together. For the next 30 minutes, I'm going to talk about how all of this shows up in the numbers and why we're so well-positioned to seize the massive opportunity in front of us in Cloud Content Management.
We'll start with the strong foundation that we built to go after this opportunity, from our blue-chip customer base, to the leading CCM technology. I'm going to highlight some of the catalysts that we're most excited about on this next phase of growth. We'll dive into the compelling customer economics that we're seeing, including a deep dive into customer lifetime value. Finally, we'll share how we plan to drive continued leverage in our business model as we scale to $1 billion and beyond. First, starting with a recap of our first half results. As a reminder, we have a January 31st fiscal year end. We put up 30-plus% billings growth in the first half of the year, and our strong top-line results are driven largely through larger customers, as well as strength in international markets, as Steph's talked about.
We've also seen significant bottom-line improvements, generating positive cash from operations over the trailing 12 months. These results demonstrate the strong momentum that we're seeing in the business. We're seeing particular strength in our largest enterprise customers. While we serve businesses of all sizes, we're really focused on the enterprise, right? Customers paying more than $10,000 annually now make up 83% of Box's revenue. Just to get a sense of momentum, in the first half of this year, we closed twice as many $500,000-plus deals than we did the year prior. We now have 54 customers who are paying us at least $1 million annually, and that's grown by 150% since we went public 2.5 years ago. Enterprise is just one of the areas where we're seeing some pretty strong momentum.
We're also changing the slope of our growth curve internationally, as Steph and Neil have talked about. We've grown the contribution of our international markets from 17% a year ago to 21% today. As Steph mentioned, that's being driven by some fantastic results we're seeing in Japan. Going forward, we're also building out our operation in Germany this year, where we see a pretty compelling opportunity. As it relates to the industry side of things, we're seeing the most traction either in regulated industries or industries where there's a lot of external collaboration. The top three industries represented in our customer base today are healthcare and life sciences, professional services, and financial services. There's one opportunity we're particularly excited about is in the public sector, even though that's only about 3% of our revenue today.
Now, we'll talk about how we're going to continue driving this momentum going forward. This year, we've been accelerating investments in sales capacity and marketing technology that'll set us up for rapid growth, and sales efficiency improvements going forward, many of the key growth catalysts that Steph and others have talked about are already beginning to pay off. First, on the customer expansion side, we have more than 76,000 paying customers, 64% of the Fortune 500, and we're seeing consistent expansion across all customer cohorts. On average, our customers are growing by 17% annually in dollar terms, and that's still being driven primarily by seats.
Increasingly, we're seeing new products as a catalyst in the business, opening up both new use cases as well as allowing us to go deeper, or, new markets as well as allowing us to go deeper with CCM use cases. As Neil mentioned, we're building a world-class partner ecosystem. These partners help us expand our product capabilities, they help us scale out our infrastructure, and they also provide go-to-market distribution and leverage. Many of the benefits we see by working with these customers show up in these international markets. That's why we have a really, really compelling opportunity to continue growing there going forward. Today, we can now address most customers' data residency and compliance requirements, and with the new GDPR requirements coming next year, that can be another additional catalyst for growth.
We already have a presence in the markets that we want to be in internationally, we don't expect to need to make significant investments to really capitalize on this opportunity. All of these catalysts really help contribute to that land and expand business model that we've talked about in the past, which is the underlying engine for growth across all of our customer cohorts. This land and expand dynamic is especially powerful in our largest customers. What you're looking at here are those $54 million customers that I mentioned earlier. The blue boxes represent a year in which those customers expanded their contract value with us, and the green boxes represent the year that those customers achieved $1 million in annual contract value. I note a few things here.
First of which is that largely due to the momentum that we're seeing with Box Platform, we're increasingly seeing financial services customers show up in this list. Another sort of dynamic that's changing is, three years ago, we were rarely selling million-dollar deals out of the gate. As you can see more recently, that's happening a lot more often, these larger initial deals. Probably the, at least in my opinion, most fun fact from kind of these sets of customers is over the past 18 months, all but five of these customers have actually grown their contract value with us. A new addition to the slide this year, looking at these blue stars, those represent the sale of one of our newer products. 55% of our million-dollar customers have now purchased at least one of these newer products.
That's up from 25% a year ago, those trends are accelerating. Couple years ago, in FY 2016, we had five million-dollar customers purchase one of our newer products, or at least one of our newer products. Last year, 21 customers did so, and already through the first half of this year, we've had 16 of these million-dollar customers buy one of those newer products. We have a huge opportunity to continue growing within our existing customer base, not just by selling more seats, but also by selling additional products over time. Here's what those products look like and how our roadmap has evolved. As a reminder, when we went public two and a half years ago, we were a single product company, and since then, we've added five revenue-generating products to our offering.
Some of them allow us to enter new markets like Box Zones, Box Governance, and then some of them allow us to go much deeper into Cloud Content Management use cases like Box Relay and Box Skills. As we continue to add to our portfolio and make broader CCM solution sales, we expect new products, and their contribution to our overall new bookings, to more than double by the time we're a billion-dollar business in a few years. You can see on this slide a lot of the momentum that we're seeing in these attach rates across customers who are paying at least $10,000 and at least $100,000 per year. That's a pretty meaningful part of our customer base as well. Mention that $10,000-plus customers are 83% of our revenue, $100,000-plus customers are 57% of our revenue.
As we further expand our portfolio and improve these attach rates, these new products can be really meaningful revenue drivers for us. In the past, we've noted the strength we're seeing in large deal counts and that trajectory, but we're also seeing deal sizes within these categories growing as well. Since we went public, the average contract value of our six-figure customers has grown more than 20%. When we make these broader CCM solution sales, we also generate greater pricing power. Typically, we see about a 20% pricing uplift when we sell Box KeySafe, and about a 30% pricing uplift when we sell either Box Governance or Box Zones.
We've talked about in the past that price per seat has remained steady for the past several years, but we're seeing an increase of late as these newer products are starting to gain more traction. Though, as a reminder, due to volume discounting, we tend to see a lower price per seat at the tail end of the year when we sell more larger deals. Even in Q4, we maintained a price per seat of more than $100 per user per year. The innovation around our product capabilities represent not only a major growth catalyst for us, but it also drives a stickier product and stronger customer economics, right. It's really these compelling customer economics that make Box's underlying business model so powerful.
Over the past 12 months, we've seen a churn rate of only 3.5%, and that rate is even better in our largest enterprise customers. At the same time, as I mentioned, the average customer with us is growing by 17% annually. Again, that rate's even stronger when you look at the customers in the enterprise segment. That results in an overall retention rate of 113% over the past year, which means that we would have grown revenue over the past year by 13% if we hadn't signed up a single new customer. All right. Now let's dive into some of the details and what we're seeing in the customer life cycle. Here we're going to compare what it costs to land, expand, and renew a Box customer, and how ultimately that translates into a highly profitable customer base over time.
Just when we look at all these spending figures as well, these are all fully burdened expenses, so include everything from ramping sales reps to allocated rent expenses. The majority of our sales and marketing expenses continue to be geared toward acquiring new customers. We recoup our sales and marketing expenses in about 21 months, which is an improvement of where it was a year ago when it was about 24 months. All right? At the same time, there's a lot we're doing to continue to improve our go-to-market efficiencies, which we'll cover in just a bit. As you'd expect, and as was the case in the past, we typically see much more efficient expansion sales relative to landing new customers.
That's because once we've built a relationship with customers, once we've gone through the legal and compliance and security process with them, it's typically a smoother process to make additional sales. We also have very strong visibility into how customers are using the product, and that allows us to much more effectively target our expansion efforts. On this type of sale, we break even in a little less than a year, and that's pretty consistent with the economics that we saw a year ago. We continue to see highly efficient renewal sales with the cost remaining at about $0.05 of spend for every dollar of renewal revenue. If you add that to our 70, or combine that with our 75% gross margins, that means that our renewal base of customers has a contribution margin of about 70%.
What that means is that as our customer base continues to expand and mature, that drives a huge amount of leverage naturally in our business model. Putting it all together, every new dollar of annual recurring revenue that we bring in generates more than $9 in contribution margin over a 10-year period with today's economics, and that figure has gone up a bit over the past year as well. All right? We have enormous future value embedded in our revenue base of roughly half a billion dollars today. As a reminder, about 95% of Box's revenue is recurring. Even in our new bookings, about two-thirds of those new bookings are driven by existing customers, where we tend to have much better pipeline visibility. When you combine that with our best-in-class retention rates, Box has one of the most predictable models in all of software.
All right? When we think about Box at a billion-dollar scale, we expect that the customers that we already have today are going to contribute more than 75% of that revenue. Those best-in-class customer economics and the trends we're seeing are the biggest reason that we're so confident in our path to becoming a billion-dollar company. Going forward, we're going to be very focused on both gaining additional leverage by driving sales and marketing productivity primarily, and on accelerating Cloud Content Management use cases. I know you've seen this slide, Jeetu highlighted it, but important to understand how we think about the Cloud Content Management market. It's a pretty interesting dynamic, and we talk about a lot of these sort of large CCM wins and ECM replacements.
Would note that in some cases, we are outright going to replace legacy technology, whether it's a network file share or an OpenText deployment. In a lot of cases, we're going to extend the technology that's already in place in organizations. For example, extending the capabilities of FileNet. In some cases, we're going after completely new sort of greenfield opportunities, particularly with Box Platform. That might be digitizing a paper-based process, for example, or moving work that would have been done from an internal development team onto Box. All right. In any case, as our product evolves, as we sort of mature a lot of the products that you're seeing and build out the product roadmap, we'd expect to drive disruption across all categories of this CCM market.
This slide just goes a click deeper into what the enterprise content management market looks like today. This is IDC estimates pegging that market at about $9 billion and growing or expected to grow at a rate of about 9% annually for the next several years. This doesn't include, this is just a subset of the Cloud Content Management market, and this doesn't include things like collaboration, web content management, or home directories, which in and of itself is a $4 billion market. If you think about these categories, Box can address about 50% of this market already today. As you just highlighted, again, we're not porting ECM technology to the cloud. We are building a fundamentally new way for people and organizations to work with their content.
We expect these use cases to drive a significantly higher portion of our growth in the coming years versus what our revenue base looks like today. While we're going to be investing aggressively in capturing this Cloud Content Management opportunity, we also expect to drive significant leverage in the model. This is comparing what our sales and marketing spend as a percentage of revenue was in the first half of this year versus what we expect at a billion-dollar run rate. We expect that the majority of this improvement is actually just going to come from the natural scaling of our model that we discussed earlier. Over the past year, we've also generated double-digit gains in ramp rep productivity, and we're benefiting there both from larger upfront sales as well as from more efficient customer acquisition by leveraging channel partners.
We expect to continue making progress here and achieve some benefit both as our sales force ramps and as we benefit from the investments that we've been making in our marketing infrastructure. We also see our self-serve business as another opportunity for leverage. That is our most efficient customer acquisition channel. While we can use that engine to drive kind of test new markets, drive some growth internationally and in the smallest subset of our customer base, we're also increasingly seeing that as a really efficient way to fulfill business online across companies of all sizes. We also would expect go-to-market efficiencies to improve as our partner contribution grows, and we have some pretty exciting partnerships in the works that we've talked about over the past couple of days, and we'll have Fujitsu and Azure coming online and really ramping up as well.
Finally, on the far right, we expect to continue to focus on delivering our service to our free users as efficiently as possible and should drive some improvement there as well. Altogether, by the time we reach a billion-dollar run rate, we'd expect to drive a 16 percentage point improvement in our sales and marketing as a percentage of revenue. Going beyond sales and marketing, we've made significant improvements in spending as a percentage of revenue across all areas of the business. We drove significant leverage last year, and we've seen a more metered rate of improvement this year for the reasons we've discussed in terms of ramping up our sales and marketing investments in particular. You can expect to see a steadier pace of improvement going forward on our path to $1 billion.
Looking at the chart on the right, you can see the progress we've been making toward generating sustainable positive free cash flow. As a reminder, we're committed to delivering positive free cash flow in both Q3 and Q4 of this year, as well as for FY 2018 overall. We are also committed to adopting a new revenue recognition standard, which is pretty exciting. ASC 606, we don't expect ASC 606 adoption to have a material impact on our financials, although we do expect some short-term benefit to operating margin, primarily due to capitalizing commissions expenses over a longer period. We'll get into a lot more detail around the impact of ASC 606 on our Q4 earnings call.
Looking ahead, due to the momentum that we're seeing in the business, we expect to achieve a billion-dollar annual run rate by Q3 of FY 2021, which is a quarter earlier than the timeline that we shared last year. If we were to generate $250 million in revenue in Q3 FY 2021 to lead to that billion-dollar run rate, that would represent a compounded annual growth rate of 24%. We also expect to deliver our first quarter of non-GAAP profitability next year, which is an important milestone for us. If you compare the model that we're showing here on the right versus the target model from last year, you'll note that there's been a two percentage point shift from sales and marketing into R&D.
We're now more confident in the leverage that we have been driving and will be able to drive in sales and marketing, and we definitely want to make sure to invest against the CCM opportunity and continue to build out the leading technology in that area. As we continue to manage our expenses and as we continue to benefit from scale, we expect this to result in operating margins north of 10% and free cash flow margins north of 15% by the time Box is a billion-dollar business. As a recap, Box is building the blueprint for the future of work. From everything you've heard about over the past couple of days, from Box Skills to Box Graph to Box Elements, we're completely reimagining the way that people, information, and applications can all come together.
We're really proud of the progress that we've been making across the business, from our product to our partnerships to the financial model. Box is now uniquely well-positioned to take advantage of and really seize that huge Cloud Content Management opportunity in front of us, and we expect our path to $1 billion and beyond to be a pretty exciting ride. With that, I would like to call up my friends and colleagues back to the stage with mics for some Q&A.
Hey. How you doing?
Good.
Great. Oh.
Two of them.
Okay, got it.
Hi, guys. Rob Owens from KeyBanc. Given the success that you've seen in Governance thus far, I'm kind of curious, I think you mentioned yesterday you got 1,000 customers. Against a base of 76,000 customers, given how long it's been out, and then looking at the stat where you showed that most of your customer set actually comes out of regulated industry, why aren't you seeing better penetration there? Is this the model for other kind of incremental opportunities as you begin to roll those out too?
Why don't I kick off the answer for five seconds, then I'm going to force Stephanie to answer it. Basically, as we've gone through this journey of becoming a multi-product company, it causes us to need to change and evolve how we go to market and how we think about upselling customers, because for literally 10 years running, the only upsell conversation we had with a customer was, "How many more seats do you want?" "How many more people in your organization are using the product?" It was not necessarily about navigating to different parts of the organization, such as the legal team or the compliance side of the organization or risk and security. We were able to do that in the initial part of the sales process.
Being able to go back in and present a completely new buyer with a new set of use cases other than just end-user seats has been a pretty significant transformation for us, and I think we're at that inflection point from a go-to-market standpoint, where now we want to be able to go and scale that up. That's, I think, why it's taken longer than we would've liked to be able to see this as growing pretty quickly. This is one of the biggest priorities of Steph on the go-to-market side is how do we kind of ramp that up in a much more aggressive way because we do know that products like governance have wide applicability. I don't know if you want to talk a little bit about.
Yeah
what that looks like.
Sure. I might even throw in a couple of real stats just to give you an idea of the traction. We've been spending a lot of time working with our sellers and the partner sellers on helping them to sort of change this dialogue with the client. Really going in and understanding how do we help them rethink some of their business challenges. It's working. We're getting traction. I was just looking, I hate to get a little nitty-gritty. I was looking at pipeline data last night, just to give you some numbers. Of all of our commercial pipeline right now, 76% has governance attached to it. It's working in terms of just changing this dialogue.
It's a conscious motion, to be quite candid, I've been through this over the years, to move from what is essentially selling deals to solution selling, consultative selling, becoming a trusted advisor. The conversations that I've had this week alone with the CIOs and the CSOs are telling me that they understand that this is a much different dialogue now. My job is to ensure that our people, our sellers, and our partners are able to have those conversations because, to be quite candid with you, I think they're looking for the solutions, and we've got to step up now, and we have this opportunity to have that dialogue. The signs are very promising, and we're just going to keep pushing it harder.
Hi, guys. Phil Winslow, Wells Fargo. A question for Dylan and Stephanie, then a follow-up for Aaron and Jeetu. Dylan, thanks for providing the updated economics on the land and expand. We saw that $2 gone down to $1.75 for the new acquisition, and then obviously the upsell stay at $0.90. I mean, obviously, to improve that ratio, you can either call it lower the $1.75, or you can improve the dollar that you get for it, so to speak. What's actually been improving that over the past year? Has it been sort of the revenue side of the equation where you're getting higher price per seat because they attach or just bigger deal sizes, or has it been sales productivity? As you think about the long-term model, Stephanie, you laid out a lot of things that you want to drive there.
What are the things you think you can hit on early versus that'll take longer to get that margin ramp and that productivity?
Is this still on? Can I just talk?
Yeah.
Okay, great. Fantastic. The biggest impact there, as we talked about a lot of different levers that we're pulling, some on the kind of top line, some on the bottom line of the equation to drive those efficiencies. The biggest impact has been on the top line sort of productivity piece. Right? That's been driven largely kind of showing up in higher average contract values, particularly for that initial sale, and that's in large part being driven by some of the new products and higher price per seat that are showing up. We continue to drive improvements in things like the free user marketing as a percentage of revenue has gone down pretty significantly. In terms of the magnitude, the biggest thing driving that is really just rep productivity being driven by higher price per seats, higher average contract values.
I'll jump in now. In terms of short-term versus long-term, I guess we're doing a number of things. We've increased the engagement with our customers sort of on a very proactive basis to go in and have these dialogues. What we're doing, and I'll give you an example, I was out on the road for three weeks with the team, essentially we are going into existing customers and reframing the conversation entirely. We're actually taking them on the journey. We've got some tools that we're leveraging now to show them this is how you're using the technology today, this is where we think you could be using it better, and these are the recommendations for getting there. We're literally taking them through this, both at very top levels, all the way down to our admins.
We've got some very focused programs around enabling the admins, getting into line of business, looking at where we've actually got traction, going into the CISOs, thinking about some of the things that we're doing from a security perspective, adding governance. It's just a very different conversation. We're taking a fairly programmatic approach, to be quite candid. I'm a little bit OCD like that. Look, sales motions, it's really about engagement, and I can't stress that enough, getting out there and having these dialogues. It's one of the reasons why we're really emphasizing this enablement piece for the extended team. This conversation is not siloed when you think about customer lifetime and the lifetime value of the client. What we want to do is not just capture this dialogue in the pre-sale stage.
We have an entire organization that talks to customers every single day in customer success. We have a team around online and the community side who continue to build those relationships. We're spending a lot of time thinking about how do you connect all of these sort of touch points and actually change the conversation within an organization, both an existing customer or a new client, and really expand upon that. We've really programatized it now, and it's going to become sort of part of the wiring, as I call it, or the DNA of the organization. As we do that, we're having this conversation around the breadth of portfolio. This is about multiple products within the product suite. This is not about selling base user licenses. It's a completely different selling motion for the guys and girls. We're getting there, which is great.
Most of the hiring process for Stephanie was me just testing to see how OCD she was. Left a little dust on the counter and see if she freaked out, so.
Yep. She left.
She's bringing a lot of operational rigor how we're moving customers through the journey.
Through that journey. Exactly.
Just to follow up on the product side for Aaron and Jeetu, obviously very exciting news with Box Skills here. My question here with AI ML is how much of this is a framework to enable customers to apply machine learning algorithms to the content versus actually Box maybe being able to apply it to its own products? I could think how this could be used in Box Relay for contract approvals. 95% of them get approved, only service the 5% that don't, or governance, say, based on what's in this content, this is how you should govern it. How are you kind of balancing those two?
I think it's a combination of both, actually, where in fact there's a three-part effect. One is you'll actually see customers directly using Skills and Skills Kit to go out and build interesting skills. There will be a second area, which is a partner ecosystem of SIs. This will be a huge kind of opportunity for them to start engaging with us over time, is what we're hoping. Our product portfolio, I think there's a tremendous amount of opportunity right now, and we've just scratched the surface, especially in the area of security, in the area of governance. I think there's a lot of predictive, intelligent kind of experiences that can be created, which I think you can just expect over time. This is going to be a decade-long journey for us as we start thinking about AI and ML.
This is not a one and done. We'll be talking about something next year. There's going to be a fair amount of innovation that you'll start to see happen here across all dimensions, including the ones you mentioned.
Just to play on that for a second, on Box Graph. The first thing we announced was something more for just end user productivity, which was Feed. Jeetu mentioned that security is a big domain that has a lot of innovation potential. One thing that we see is customers don't really know where their sensitive intellectual property is. It's because users don't tag the content as sensitive. When we can begin to correlate different work behaviors and different ways that people are working with information. Then layer on anomalous events that happen to that type of content. All of a sudden, somebody from the legal team looks at something that we think is a contract from a device that they've never loaded it from.
That creates a lot of signal where normally you would just have a bunch of noise of data events going into somebody's SIEM logs or security apparatus. What we can do is take the graph, which is basically a mapping of all the relationships between events and content and people and information, and start to say to the security team, "Hey, we think this is an 80% confidence level event that you might want to pay attention to. Here's why." We have a proprietary understanding of all the things happening to content in Box. That gives us a way better ability to give you things that have just way more context than you would get in just a generic kind of log format or environment. That's really where we see the graph opportunity.
Skills and Graph just sort of feed each other. You get this really nice virtuous cycle where the more context we have about the content from Skills feeds into create way more of a map of how the enterprise is using its information with Graph, which causes us to be able to build a bunch of functionality from there.
Hi, Greg McDowell with JMP Securities. I wanted to ask about Box Relay. You mentioned 250 beta customers already. It's coming to GA in November. I was just hoping you could expand a little bit on how we should think about sort of the product cycle of Box Relay compared to some of your
Previous SKUs like Governance and Zones and such
Cycle from an innovation perspective as well?
Yeah. Well, how should we think about the ramp of Relay getting into the customer base compared to the ramp of the other SKUs you have? I have one quick follow-up.
Okay. You want to take that from a go-to-market?
Yeah. From a go-to-market perspective, to be honest, we've had to kind of keep people at bay somewhat because we had limitations with the beta program, and we've had so many people who have wanted to go into the program. We're kind of maxed out. There's been this great anticipation around this product. Because of the practical nature of how these changes workplace within organizations, it's incredibly tangible for them and they immediately can see how they can apply it either in pockets or at scale within their organization. Our teams have been clamoring for it. In all honesty, we've been pushing Jeetu and the guys pretty hard for this. I anticipate this moving, from our perspective, pretty fast because we've got a backlog out there. We're ready to go as soon as it GAs.
Yeah. I think the only other piece of context I would probably add strategically is Relay is the first add-on product we've done, maybe besides Platform, where it's not necessarily that every seat within the enterprise is going to utilize it. That might be the one thing that's different. Governance, you turn on for the entire enterprise. Zones, you turn on for the entire enterprise. KeySafe, you turn on for the entire enterprise. This is less of a reflection around kind of contract value and uplift that we expect and more about the use cases are going to be very sort of function specific. Very line of business specific. A marketing team might adopt it or a legal team might adopt it. That we don't know all the implications that that will have from a go-to-market kind of standpoint.
It will not be one-to-one parallel with Governance in terms of the universal deployment of the product even though we think it's universally applicable, to have workflow built on top of Box.
Yeah.
Thanks. One quick follow-up for Jeetu. I think Box Platform has been out for a few years now, and when it was originally released, it had one pricing model. About six months ago, I think in April, you introduced a new pricing model for Box Platform. I was just hoping you could sort of give us an update on how that's trending overall.
Yeah.
Thanks.
Yeah. We don't specifically disclose numbers on kind of breakdown of the Platform. What we do, the new pricing model has actually been very successful from the standpoint that what it did was it took away the concern. One of the things we wanted to do with the pricing model is not have it be a friction point for people going out and adopting this. In the Platform and developer community, what we found is if you don't provide people what pricing at scale looks like when they do scale up, they tend to be apprehensive to go out and start using it up front. What this pricing model did is actually really unlock that behavior, where the concerns went down on what the scale pricing is going to look like. We've actually started seeing some very, very healthy deals.
In fact, some of our largest commercial deals now are kind of Platform deals. These folks are spending hundreds of thousands of dollars even though they might be a small company. The behavior over there is, one, they feel comfortable for price at scale. They're actually starting to see this being a pretty strategic kind of imperative of what they're trying to do internally within the organization. The new pricing model from a resource standpoint is good because it benefits us. As they scale up, we actually start to make sure that we keep benefiting from the model. I'm really glad we made the change. We actually learned a lot from the first pricing model to go out and iterate on it. Pricing's always tricky in these kind of scenarios because you don't really know what's going to be the case.
What you're also starting to see is now you're starting to see a lot of customers come to us with, "Hey, I want to have an ELA," where even though you've got these kind of pricing models by resource, now I have all of these different areas and how can I go out and just do an ELA? Which is a really good signal from the standpoint of not just the strategic nature, but the kind of scale that customers are thinking about. We're seeing a lot of activity actually in the financial services segment where if you looked five years ago, that was one of the segments that we had not penetrated as well, and now all of a sudden you see that as a very, very rich opportunity for penetration.
Question. Hi. Melissa Franchi from Morgan Stanley. Just have a question on Microsoft Azure relationship. I'm just wondering, it's great that the sales force can now sell Box, but are they neutral to selling Box versus OneDrive? Is there any reason to believe that this relationship will ramp differently than what we saw with IBM?
Yeah. Great question. A little context about what Microsoft have changed, I think is relevant here. They've gone through a massive transformation within their sales organization. Now most of the incentive dollars for sellers at Microsoft is for consumption of Azure, not for licenses of traditional products. They were just working through that. They did that June 1st of their new fiscal year. What we're seeing, there are situations where a Microsoft account exec who's agnostic, imagine that they've already sold and deployed Office 365, but for different reasons, OneDrive or SharePoint Online are not deployed. That AE could stand to make more money if Box is deployed to that customer than if OneDrive is turned on. Right?
That is by design, because what they want to do is let the customer decide which tools are going to be relevant, and if they lose the battle on a particular tool, their sales reps are equally incented to ensure that Azure consumption is underneath those tools that the customers choose to bring in. That's not a hypothetical. That's a real intentional change. Microsoft have been very smart here relative to the other public cloud players because they get that they have got the purchasing relationships all around the world in pretty much every enterprise that anybody would want to work with.
They have actually changed that. Now we've not yet seen, because the product will ship in November, we are now, just like I mentioned earlier, turned on the system that allows us to share leads over and back between each other. There is pent-up demand, but we just don't know yet how this is all going to work.
I will add one thing on the competitive side on OneDrive and SharePoint that's pretty important for this room to understand is, and we are starting to see this a lot from customers who are getting frustrated, is OneDrive and SharePoint, and SharePoint for external teams, are all completely different product stacks. What ends up happening sometimes is they actually promote OneDrive as a product for personal use within business users. At some point in time, that product will get mature enough where you want to go out and collaborate that content with teams. What they recommend, this is not us making it up, this is them saying it, you have to actually copy that content from OneDrive to SharePoint.
They then put a website page up that says, "When you're copying the content, you might have some issues, so here's a troubleshooting page for it." They actually have a troubleshooting guide for it. If you want to share it with someone outside the organization, you have to further copy it to an external team site. The big area where customers are excited about it is that actually doesn't allow them to have a single policy engine that applies policies across all pieces of content because you're duplicating content. One of the big reasons why customers are excited about using the Azure infrastructure, using Box, is because you have a single place where content can be kept.
Once you apply a policy on content, you don't have to go out and reapply it from different places, depending on keeping track on when people duplicated the content. Now that's a huge difference that I think you're starting to see the market now really pick up on.
I think we have time for one more question.
Brian Peterson from Raymond James. Stephanie, I just wanted to hit on your comment on the ACV potentially doubling to tripling over time. If we think about a $500 million run rate, you get to a billion just by doing that. Why wouldn't the focus be on-
Did you just take that from Aaron?
I've been emailing everybody to-
It's Aaron.
management via Wall Street.
I'm just curious, as we think about upsell versus new sell, and then if you have to reengage those customers at a different level because the conversations are so different than what they were maybe two to three years ago as a multi-product company.
It's funny because Jeetu and I were chatting about this earlier. The customers want to have a different conversation. I was sitting with a Fortune 50 yesterday morning, the CISO, and he says to me, "Steph, I have to report back to the board. We have 27 places around the world that are holding incredibly sensitive data, and I'm responsible for this.
What am I going to do? You guys have to come and help me create this architectural blueprint." In actual fact, this conversation is actually one that's been. There's very healthy tension now. We're not having to start this dialogue with them. They're actually having these conversations with us because it's becoming very apparent to them that they're just not driving either the productivity gains or the efficiencies or just meeting the needs of their customers, their own suppliers and vendors. I've had multiple conversations that look like this all week long, where they are basically, and I'm running out to a bank right after this, that they are having this conversation with us. I don't feel like this is going to slow us down at all.
This re-engagement is really, on our side, it's really making sure that our sellers are ready to have this conversation because the customers are ready. There is no shortage of demand on their side. It's really us taking advantage of this opportunity right now. It's one of the reasons why I was so attracted to coming to Box, to be quite candid with you, because there was this huge opportunity that Aaron wasn't capturing enough of.
That's completely accurate.
It's all Aaron's fault.
Yeah.
In all seriousness, it's there. Look, I've spent my entire life in and out of customer sites. That's all I've done all my life. This is a unique opportunity that we have, and they're telling us this. I think it was Jeetu that said this. We had Jeff Immelt at our CIO the other day, and he was really very clear with every executive in that room in terms of, "You guys are crazy," he essentially said, "if you aren't thinking about what Box can bring to the table for you." From our perspective, it's really our opportunity right here. I'm not worried about that pace at all. I think they're after it. They're really pushing us. The onus is on us now to capture that.
Great. I think with that, we are out of time for the afternoon. I wanted to really thank all of you for being here, making the trip to be here or to be on the webcast. If you have any questions at all, please feel free to reach out to myself or Alice, ir@box or to our direct addresses, and we very much look forward to speaking with you. Thank you.
Yeah. Thank you so much. Really appreciate everybody coming out.