Hello. Good afternoon. I'd like to welcome you to Box's fiscal year 24 financial analyst day. I'm Cynthia Hiponia, Box investor relations. On behalf of the entire Box team, I wanna thank you for joining us today. We have a great event planned over the next couple of hours. Aaron is gonna kick things off with a look at our vision and strategy for the future. Diego, our Chief Product Officer, will go over our product strategy and roadmap. We're also pleased to have Manoj, our VP of Security Products, to do a deep dive on our security, compliance, and governance roadmap. We'll take a short break. We're delighted to have one of our customers from Warner Music attending today. Stephanie will talk with John on his company's multi-year journey with Box. Stephanie and Mark will go and cover our go-to-market and sales strategies.
Dylan will pre-presenting our long-term financial target model, and then we'll open it up for live Q&A. For those of you who are attending via webcast, please feel free to email questions to ir@box.com at any time today. Let me remind you that this presentation contains forward-looking statements regarding our future business and financial expectations. There are a number of factors that could cause our actual results to differ materially from our expectations. You should not place undue reliance on forward-looking statements, and we assume no obligation, nor do we tend to update them. We encourage you to review the forward-looking statement disclosures in today's presentation and risk factors in our SEC filings for more information. This presentation also includes non-GAAP financial measures. Unless otherwise indicated, all references we make today to financial measures will be on a non-GAAP basis.
You can find additional disclosures regarding these non-GAAP measures, including reconciliation with comparable GAAP results, in the appendix of this presentation, which can be found on our IR website. During today's presentation, we will also be sharing information on new products, features, and functionality that we are planning. This information is intended to outline our general product direction and should not be relied upon in making an investing decision. With that, I'd like to now introduce our CEO, Aaron Levie.
Thank you. Thanks, Cynthia. I hope everybody's doing well today. Appreciate you taking the time to join us and learn a bit more about our long-term strategy and what we're building at Box. I'm gonna go through more than anything else, really, the big tailwinds that we're riding and our strategy for addressing those tailwinds, and then hand over to Diego to talk about some of the product specifics of what we're gonna be investing in to address this market transformation that we're seeing. Again, I'll go through the corporate strategy, and then we'll go through a few other presentations this afternoon.
Our mission at Box is to power how the world works together, we're incredibly proud to be able to do this now for over 115,000 customers and nearly 70% of the Fortune 500. One thing that we get really excited about is the breadth of the customer base. We get to work with companies of all sizes, small startups that are growing and businesses in a variety of new sectors, as well as some of the world's largest enterprises and some of the most important businesses across every range of organization and industry. We work with leading companies like CrowdStrike, leading technology innovators across every sector of technology. Work with leading manufacturers, Honda and other leading automotive companies.
We get to work with amazing consumer brands that are inventing new products and all-new services in their markets. We also work with leading life sciences and healthcare organizations that are on the front lines of amazing medical research that are continuing to save lives and transform the world. We get to work across the public sector as well, really helping customers solve incredibly important missions across defense and broadly in the public sector. When we think about all of the exciting work that we get to work with our customers on, they are transforming the work in their organizations, how they collaborate, how they share, and we could not be more excited about our mission going forward to continue to power how the world works together.
What we're gonna lay out today is really our long-term strategy for continuing to drive profitable growth at scale as a software platform. There's sort of four big components to this strategy. The first is that we're going after what we believe is a very large market, well over $70 billion in global spend on all things that surround content. We're attacking an incredibly large market with significant tailwinds. We're attacking that market by building the leading Content Cloud platform that can address the broadest range of use cases for our customers and powering workflows across the entire enterprise. We're gonna drive a continued go-to-market strategy, which is our land and expand strategy, to bring the full platform to our customers, which includes driving increased adoption of our Suites across the broader customer base.
Finally, we're gonna drive sustained growth and higher operating margins to deliver a Rule of 45-plus outcome in our long-term target. Dylan will go through our financial model in more detail a little bit later in the presentation. These are the four big messages that we have today to share with investors and the broader market around our long-term strategy for driving profitable growth at scale. I wanna first dive into the mega trends that we're seeing in work, what's shaping work, where is it going, and how we're gonna address our customers' biggest pain points with our platform. Work today is undergoing the most amount of change that really we've ever seen. It's truly incredible how much is being shaped and being transformed in the workplace today.
I'm gonna go through a few major items that we're seeing that will affect the future of work and how our platform relates to that. The first is that when you look at where work is happening, it's obviously much more hybrid than ever before. 74% of US companies are investing in long-term or permanent hybrid working strategies. What's amazing about this for a platform like us, is whether work happens in person, at a inside of an office or at an event, or it works remotely, you need to be able to share information, and that's obviously gonna continue to be the case in a very digital form. Hybrid work still being this permanent long-term trend is a significant tailwind for continuing to shape how we work in the cloud.
The next big trend that we're seeing is that 91% of workers believe that automation and AI can improve how they work. It can improve their productivity, they can get information faster, they can automate workflows in their business. We think this is gonna be a very significant trend going forward. We'll give some brief examples today about the impact that we think AI has on our product and our strategy. 60% of executives today say that digital is gonna be core to their growth going forward. We think this continues to be a mega tailwind for companies moving more to the cloud, moving more to digital-first strategies, replacing retiring legacy IT systems, which again is gonna be a long-term driver of our growth.
We see that 67% of organizations cite an increase in major cybercrime events that are happening inside their organization. This is a significant impact on how companies work with their information and how they need to protect their data. You'll see that as a major part of our strategy. We'll do a deep dive in security today as well from a product standpoint. When you think about the average cost of a breach being well over $4 million in terms of recovery and all of the processes it takes to solve these problems, this is a very significant and material cost for businesses to make sure that they're protecting their most important assets.
We're seeing that this has an even bigger impact when you even look at things like the market cap impact that can happen when there's a major breach event. We've seen recent examples of this playing out across industries. When you add all of that up and then you multiply it by the fact that we have more data than ever before, these pose significant challenges and opportunities for our customers, but as well as our platform. There's gonna be 175 ZB of data by 2025. Information in more places being created faster than ever before. It has to be managed, it has to be secured, it has to be protected. We have to understand what's in this information.
When you think about these mega trends that IT organizations are facing, every enterprise is focused on a few critical digital imperatives. When we talk to our customers across every industry, whether it's life sciences, financial services, technology, manufacturing, no matter the industry, we see three big trends that they're facing. The first is they have to drive productivity across their business, especially in this economic environment, enterprises are looking to get the most amount of impact from their talent and the way that they work with their customers as possible. That productivity has to exist in a hybrid work environment. It has to exist in the office, it has to work when people are remote, and they have to be able to serve their customers in increasingly digital ways to drive that productivity up as well.
We're seeing a major trend of companies need to also get fit on the cost side. How do they move more infrastructure to the cloud? How do they simplify their IT stack? How do they get rid of redundant systems? That's gonna be a major part of our strategy that you hear from us around how we're gonna help our customers simplify their IT environment and optimize their spend in the cloud. Finally, they have to protect their most important data, and they have to make sure that they remain secure. With all of this information flowing inside and outside the boundaries of an organization, how do they stay secure? How do they stay safe with in this new digital world that we're in?
When we think about these three big trends, we obviously think about them through the lens of content. How do these trends impact the way that companies work with their most important data, which is their business content? If you think about every single department and organization, every part of a business, their content has the most valuable information, the most important intellectual property that an organization works with. In sales, this could be the asset that closes a deal. It could be the proposal that brings a prospect on board. It could be the critical information that is the decisive information needed to be able to work with new clients. In marketing, this could be the assets that turn into a new breakthrough campaign.
In R&D, it's the timeline and critical project details that deliver an all-new product that a company has to deliver. In legal, it's the critical contracts, it's the patent filings, it's all of that critical information. Inside of HR, it's new employee onboarding, its resumes, its performance reviews, all of that content that gets generated. In operations, it's the supply chain data that moves a business forward. When you think about what's actually inside of our content, it's our most important business value. It's the intellectual property that drives businesses forward. The challenge that enterprises face is that their content is strewn about in a wide number of systems. We've fragmented content across a large number of applications and platforms.
The reason for this makes sense, because over the years, we've had point solutions emerge for each new use case that companies have to do with their content. You have a point solution for document management. You have a point solution for storage infrastructure. You have a point solution for workflow or e-signature. We have all of these solutions that have fragmented data across the enterprise. This has become a huge problem because with that fragmentation, we can't connect these systems very easily together. That ultimately means that we have major security risks as well as other challenges that we face. When you have that data fragmentation, you can't keep track of where information it is at any given time. Imagine if the access permissions change in one system preventing access to that data, but they don't then correspond to another system.
All of a sudden, you have this sort of open access to information across different platforms. It also produces major compliance challenges. It means that users can't very easily get to the information that they need to be able to do their job. It slows productivity and ultimately encumbers workflows inside the enterprise. Finally, and especially in this economic environment, we know that it increases cost and complexity of an enterprise. Steph will share a little bit about what we see from our customers around what the totality of these solutions can end up costing when you do have this set of fragmented solutions in an enterprise. These are major challenges that enterprises have to face, and it's exactly what our Content Cloud is built to solve.
We've been building a leading content cloud. It's one secure platform to power the entire life cycle of content in an organization. Instead of having lots of different points or fragmented solutions, you get a single platform that powers that full life cycle of content, starting whether you're ingesting data into the cloud, protecting it and classifying it, collaborating inside or outside the enterprise. You'll see all new collaboration features that Diego will walk through. Driving workflow automation or getting an e-signature, publishing content to teams and departments, again, another new area of innovation that Diego will share. Getting content analytics or business insights or being able to retain data at the end of a process for that final end of the life cycle, whether that's archival, or compliance reasons that you need to be able to manage that content.
Of course, our platform remains neutral to any application that customers wanna be able to work from. That ability to extend all of those capabilities as well as your content into any third-party tool is, again, a fundamental part of our value proposition. We work with well over 1,500 application partners that we can integrate with, and customers build on top of our APIs directly as well. With our platform, customers can ultimately solve a wide range of problems, including being able to limit or reduce the size of that IT stack to be able to have a single platform for powering that full content life cycle. Over the years, as we built up this technology stack, that's allowed us to actually dramatically increase the total addressable market that we're going after.
Just a few years ago, we were in the kind of $20s or $30 billion market range in terms of the document management and storage infrastructure that we solve. Fast-forward to today, it's well over $70 billion when you look at the expanded set of security and governance capabilities, workflow solutions, capabilities in the document management space, and the higher value use cases we can now solve on top of our platform that customers consistently implement this for. Now a lot of customers and investors ask us sort of, what are we focused on from an innovation standpoint? How do we make decisions about which parts of this market are we going to continue to build into? We have a pretty straightforward framework. It consists of sort of the intersection of these three big ideas. The first is, where can Box provide asymmetric value?
It has to be in markets that are content-centric, where the whole value proposition sort of starts or ends really being about content. We look at spaces that are very content-focused. We wanna go after attractive markets, so these are either small markets today that are rapidly growing, that's something like the visual collaboration space, or maybe an existing larger market that is very content-centric, like enterprise content management or e-signature, where it's a very large TAM today, that we can go after. Finally, look for areas where they're ripe for disruption. Where can we provide a unique value proposition by having a more integrated solution than maybe what the incumbent or alternative vendors offer?
These are areas where by attaching a new module or a new value proposition on our platform, we can streamline the user experience for customers, and we can provide a much more integrated offering for our customers, one that is obviously gonna be much more disruptively priced as well because of our bundling strategy. We wanna live at the intersection of these three components, content-focused, attractive, larger, fast-growing markets, and those that are very ripe for disruption. We think this, again, allows us to go over that well over $70 billion market opportunity. We have consistently been on this path for the past number of years. When we started the company, it was really about how do we power secure storage and sharing for our customers.
We then expanded into really going and disrupting the enterprise content management market in the cloud. We started powering more of that content life cycle with things like our data governance module. We saw the opportunity to help customers with advanced security needs, new workflow capabilities, and much more. That was really where we dramatically started to expand the total breadth of our platform. Fast-forward to the past couple of years, this has really been the transformational journey that we've been on, where we've driven new additional products in areas like e-sign, going much deeper in workflow, obviously our much more advanced security capabilities, and fundamentally bundling these capabilities together with an integrated suite. That's obviously driven a substantial amount of our growth over the past few years.
It's also allowed us to be much more differentiated from the competition. Going forward, you're gonna see this exact same pattern. We will continue to, over time, as we have more innovation in the platform, we'll make sure that we continue to bundle that into very attractive, easy to access, bundled and suite capabilities for our customers. As we've driven more innovation, and through our packaging as well as through our product innovation, we've been able to both expand the total number of seats and enterprises that we serve, as well as drive even more value in the form of price per seat. We expect that trend will also continue over time. You'll hear from Steph as well as Dylan about how we continue to drive those trends.
On the product front, and the company front, we have sort of three key goals. How do we drive seat growth? A lot of our innovation is how do we go wider within an organization? How do we make sure we can serve a greater population of end users and business processes? You'll see a lot of innovation that we drive through that lens. The second is how do we drive a higher price per seat? This often means going deeper in key verticals. It means tying much closer to critical workflows in the organization, making sure that we integrate more deeply across the various applications that a customer has. This lets us add up that value over time.
Finally, we wanna continue to drive that gross retention and net retention rate that we talk a lot about. How do we make sure we drive mission-critical business processes for our customers? How do we continue to improve the scalability of the platform? Obviously, and Steph will certainly get into this, how do we deliver best-in-class stickiness through our customer relationships and customer success model? That's what we're gonna do on the product front and the overall innovation strategy. That ties directly to what we're doing on the go-to-market front, around how do we drive seat growth by going wider in organizations. That's often through our land and expand model as well as increasingly even ELAs. How do we drive higher price per seat? That's all about moving customers into these Enterprise Plus suite.
Ultimately, how do we improve retention? Again, that's greater stickiness, deeper customer relationships, and higher impact value propositions over time. That's all powered by our land, adopt, expand, and retain go-to-market motion. Everything about Box is organized through this lens of how do we land a new customer, how do we make sure they're getting the greatest amount of adoption from our product, how do we then ultimately expand their usage, and then, and then ultimately move them into higher tier plans, and then how do we retain them over the long run, through those sticky use cases and partnership. From a product standpoint, the way that we're gonna deliver on that key strategy is by doubling down in the three critical pillars that we have been focused on as a company.
The first is how do we help our customers protect their most important content? Again, you'll hear all about this innovation today. Doubling down in areas like security and compliance, as well as a lot of the advanced enterprise capabilities we have. How do we drive productivity across the whole business? This is really through seamless collaboration and workflow. Really, again, doubling down on how do we power how our customers work in this hybrid environment and automate workflows in this business environment. Finally, how do we simplify their IT stack? How do we make it so they can have a single platform that powers content across the enterprise integrated into all of their applications? Again, that's what you're gonna hear from us from an innovation standpoint.
We'll be double-clicking on some of the key roadmap items that we have this year and a little bit beyond for our customers. One thing I wanted to briefly touch on, because there's obviously so much attention and excitement around this, is really around where AI will have an impact on our product and our platform. We've seen some really transformational breakthroughs recently. Even this morning, GPT-4 has been announced to the outside world. We're at the start of a new wave of AI really driven by these large language models. The fundamental breakthrough just in the way that we think about it, is these new models have become intelligent and broad enough to solve a general set of use cases. Previously, and we've been building on our Box Skills architecture for a number of years.
Previously, when a customer had a very specific AI problem, we had to go and either ensure that they worked with a specific AI vendor or they had to train their dataset on a general model. That required a lot of work from customers. They had to go through a very specific bespoke training process for their domain. Legal contracts had to go through a specific set of training, which would be separate from a company that wanted to understand their product data or research reports. You often had to get even more specialized, so legal documents in The U.K. versus legal documents in The U.S.
What these general models have been able to do is get trained on the entire internet, essentially anything that they can have access to, and then ultimately build an understanding and a way to synthesize information based on training on the entire internet. That allows you to come with problems that it really was never specifically trained for because it got trained on all general information. Where is that AI extremely powerful? We've seen some really exciting use cases in search and in chat, and in all new models to be able to drive communication. Where we get really excited about is the impact that AI can have on our content. What is inside of content? Well, it's a lot of unstructured data.
It's a lot of unstructured language that lives inside of our documents. We think that AI will have some of the most profound impact on our content. Really, for the first time ever, we can now treat unstructured language as structured data. If you just think about, like, the past 30, 40, 50 years of computing, we've had structured data live inside of databases that we can query, that we can automate, that we can pull out information and insights from. We've never really had that for our unstructured data or our business content. What's amazing is when you think about that profound impact, only about 20% of our data is really the structured data. That's the stuff that is in a database that's queryable and searchable and you can run reports on.
80% of our data is actually unstructured. The majority of the data that an enterprise has is all this unstructured content that today has been largely opaque. It's been stored in lots of different systems. Again, as we talked about before, it's highly fragmented. For the first time ever with AI, we can actually take that information, we can synthesize it, we can generate new versions of it, we can query content at scale, all again without any pre-training or domain-specific training required. Certainly, domain-specific training makes us even more powerful, but it's not as necessary at the start anymore.
When you think about the kind of use cases, and Diego will build on this in a little bit, we are really, really excited, and we have teams working on a bunch of exploratory areas right now, no announcements today, but you'll see more from us throughout this year. We're really excited about what AI can now do with your content. Imagine in sales, it can ultimately deliver the right answer to a question on demand. If somebody has a quick question about pricing or a part of the product, they can get an instant answer from the existing content that they have. In marketing, you can automatically generate new marketing materials, often trained or not even trained on the existing assets of an organization.
You can pull out the key insights from a product plan that might deliver that product even faster or be able to pull out customer feedback from a large data set that would help you make product decisions more quickly. In legal, you could pull out risky clauses from a contract just by asking a simple question of your contracts. In HR, you can get answers to any question just based on the existing corpus of policy content that a company might have. Imagine an employee just asking a question about HR policies and instantly get an answer based on what is inside of documents.
In operations, you could take invoices or other operational data, extract metadata automatically from that, and then be able to automate workflows, driven by whatever was inside of that invoice or any kind of, you know, mission-critical content that you're working with. This ability to extract insights, answer questions, generate new content, we think is gonna be incredibly powerful for our customers across every single use case. One thing that we believe makes us very unique in this is there's really two fundamental elements to solve AI in the enterprise. Well, first, you have to have data, and the great thing is we have a lot of content from that our customers manage securely inside of Box.
Tens of billions of files, that obviously become accessible only in a safe and secure way, where the models do not get trained off a customer's data. You have to start with content, which is something that, again, we have. Secondarily, because of how quickly this space is moving, we actually think it becomes really important to have a platform-neutral or Switzerland-based approach to the underlying AI models. Our ability to take that content the customers are working with and connect up to any third-party AI model over time is incredibly important. This was foundational to our Box Skills strategy, but also will be you know, very critical for us over time with these large language models.
This is sort of illustrative of how we would integrate with the AI space and make different capabilities available to our customers. We think AI has the opportunity to transform how we work with content. We are at the beginning stages of this next wave. We benefit from many years of working in the AI space with Box Shield, which is built on a bunch of modern machine learning and AI technologies, as well as Box Skills. We'll continue to build on this with, again, this latest wave of large language models. That's a bit about the overall set of tailwinds and how we have structured our strategy to address this market opportunity.
I'm now really excited to hand it over to Diego, who's gonna talk about what we're building on the product front to be able to go after this full Content Cloud opportunity. Diego, over to you.
Thanks, Aaron. Thank you. Well, welcome everyone. I'm so happy to be here. Delightful to be in New York. I was thinking of the public library that we have next to us, and that we have maybe 2 orders of magnitude or perhaps more within Box than the whole library holds. It's quite awesome to also be in person because we've been doing this remotely for a while. As you know, I'm Diego Dugatkin. I'm the Chief Product Officer at Box, and I'm here also with Manoj, that is going to speak later. Manoj Jasani is the VP of Security, Enterprise Administration, and Compliance. We're gonna do a deep dive in security. Before I begin, I wanted to tell you first, the things I've learned in the last 2 years here at Box and how Box does product.
We've been building product in a way that is very, very close to our customers. We've been basically getting close to what our customers need, the specific demand of a world-class platform that is fully integrated. To what Aaron mentioned, the integration is not only within the components that we have and the components we keep adding to the portfolio, but also with components that are part of the ecosystem of what our customers use. You'll see a lot of integrations that we have and a lot of components that are part of what the customers use also reduce friction by being so well integrated with the Box platform. That's part of what guides our strategy, to continue to make it easy for our customers to adopt Box, but also to continue to use what's most effective for them.
We also work on putting everything into one single license. The use of the suite that actually does not require charging separately for different components, it's another part of the integration that requires a planning of the product portfolio. Why is the Box Content Cloud so powerful? First, and before anything else, security. We keep building everything with a security mindset. We want to make sure that because our customers keep facing these unprecedented security and compliance challenges and risks, attacks are on the rise. Plus, there are new privacy and various compliance obligations that keep increasing. We want to continue to always think security first. That's why we're gonna do a deep dive in a moment.
Our customers need to drive productivity, and we want to help them grow through the important use of creative cycles and ideas that come through innovation in business processes that require tools that need to basically empower the teams, local, remote, hybrid, internal to the company, or with collaborators that are partners outside of the company, through the portfolio growth that we're also continuing to invest in terms of engaging these new customer experiences all within the Box platform. They all matter. Today, because of the economic landscape and the uncertainty that we're talking about also, mostly every day, we want to keep helping our customers to increase the efficiency, reduce cost, and integrate the implementations in ways that keep security in mind, but also are cost-effective. That's part of the driving compass for how we build the components of the portfolio.
Today, I will give you an update on the FY24 roadmap. We're gonna basically focus on helping this drive of productivity and simplification of the tech stack. Manoj is going to do a specific cover for our security plans and further detail to go deep into that, so that's coming right after I give the general initial overview. In terms of the real magic of Box, the special thing about Box is that we are the only Content Cloud that powers the full content life cycle, all of the components that Aaron showed earlier, but also for every area of the enterprise. We do it also in a way that is flexible, that empowers the use of our own tools, and as I mentioned also, the collaboration with other components of the ecosystem that were tightly integrated.
We solve, as Aaron mentioned, every area of the enterprise, so we can deliver for every department, and that makes us very transversal. We work with about 70% of Fortune 500. We also work with about 110,000 enterprise customers, so that volume and the variety of use cases keeps driving also the definition of what comes to the portfolio in a way that can help many different markets. I'm gonna tell you about some specifics that help in some different verticals as well.
Diving directly into the productivity focus with the seamless collaboration and workflow, what I want to show you first is the product strategy that involves growing product features that add new components to the portfolio to enable customers to do more while maintaining that integration with a simplified stack, but maintaining security first as a primary focus. Also focusing on the fact that digital transformation means that the produced content continues to grow exponentially. Because of that growth, the identification of what is important may leverage AI, may leverage many different components that are coming to the platform, but we want to do it in a way that is fully integrated. Content Insights, for example, one of the elements we added to the platform, is enabling the customer to also see who's using the content.
It's not only about finding it, but also tracking the utilization and the engagement level with the content on the platform as well. You can see who has engaged with a given content, for how long, and basically what is resonating in terms of utilization. We're also empowering customers to drive digital automation and faster, more convenient customer engagement and agreement flows that achieve basically better business results. Box is also focusing on simple yet feature-rich user experiences with the implementation of Box native products like Notes, Canvas, Content Insights that I just mentioned, Workflows, Box Sign, and also the new upcoming publishing tools that I'll mention in a moment. Let's take a closer look. Last year, we launched Notes to the row, and this year we're taking that foundation to another level.
We're bringing new interactive feedback elements like polls, improved comments with thread replies, annotations, we have Kanban boards, and we also have rich embeds all coming to Box Notes, extending what we have, already have released on Box Notes to the row. This means that customers can collaborate securely in real time, both with their own organizations, with folks that are remote, and also with collaborators that are external to Box. It's for internal and external collaboration. In addition to this text-oriented collaboration, we're also launching Box Canvas. That brings working together visually to life into a new level, giving ways for teams to connect and innovate securely, where then this publishing and the ability to create in a visual format is getting to a new level.
Canvas would have a new GA coming very soon that we'll continue to enhance after that with 30 new templates. We are connecting Canvas with our Box mobile app, and we're also adding rich embeds that extend the integration with work management tools like Jira to bring creative collaborative work into one single place. In addition to these two elements, we have now text-oriented collaboration, we have visual collaboration, we also extend Content Insights to provide this page-level ability to know who's accessing one component, to get performance information in real time, think of, say, that quarterly plan, the sales proposal, marketing materials, company policies, training. Through this approach of using Content Insights, you can get who has been using what captured their attention, who was engaged, and who has been looped in with any part of the content.
In addition to these collaboration tools, we also have the ability to extend workflows to a new level as well. We've been enhancing Relay with the ability to drive content-centric workflows with forms and document generation capabilities. For example, you could use forms and Relay to automate partner intakes, and Relay document generation and Sign could be used to automate HR approvals or automatically generate POs, and so on. Sign is growing very fast. In connection to the use of workflow, now with Sign we have our top five Sign customers have sent 30,000 documents over the past four weeks. We keep seeing a very nice ramp of adoption and growth. In the next year, we're continuing this growth, making Box Sign more compliant. The benefit of applying this investment in these new features is that we keep extending that into some specific industries.
For example, the 21 CFR Part 11 for life sciences is essential to help with the unlocking of clinical trial, onboarding and management, CRO collaboration, and new drug applications. In other industries, like specific for the federal government, PIV and CAC for signer authentication is very important. We are adding that as well. We're opening up records and contract management capabilities and inter-agency collaboration, and we also are adding application processing. We are extending Sign for these more regulated industries to continue to see good adoption there. We're also extending and improving on the signing experience. We keep adding templates, admin management. We have the signing process to power really workflows.
We continue to expand and improve on Box Sign reporting to also manage the workflows and get direct tracking on the performance and who's using what as we're sending also documents for signature. In addition to all of this, we are also extending the platform to provide publishing. To make sure that you can always find the content you need quickly within Box, we're developing a publishing tool. This tool is a new way to collect, organize, and publish content in elegant portals. This will make easier to access, to find, and have easy-to-use content playlist. Think of Spotify for assets, content, and reports. This is a great addition to the platform. Box Security and Compliance continues to apply. We keep making everything integrated, making the content will only be available to its intended audience by being within Box.
In addition to all of this, Aaron has set out the specific framework for an investment we are making in AI. We are not announcing any releases yet. As you know, AI is now capable of parsing unstructured content. This is a huge breakthrough because it has been opening many potential use cases. Think about being able to summarize those long documents, tag and classify all of those old files, automatically tailor content and the specific content for the audience they are intending to. There are so many possibilities. Now, using our Box Skills that you might be familiar, that framework we already have been using to experiment with different AI-powered use cases and making sure that our platform can handle AI seamlessly and securely in a compliant way. That's another differentiator.
By bringing everything within the Box platform, the integration of AI would stay within the elements of a secured, compliant, and governable platform. As an example, we're using now the LLMs in Box Notes to automate content creation, as well as potential use cases that would use AI-powered advanced Q&A documents in Box. While these are still early explorations, the broader applications are much more expansive. There are many other use cases that you can imagine, we are exploring now to launch in the near future.
Each one of these transforms how we work in different ways and can have an impact in every one of these different departments that Aaron was referring to earlier, where across the enterprise, you can apply Box to answer a specific question or extract insights from the content itself, automate more efficiently and more automatically. You basically set the automation engines to run, to discover content or to generate content based on existing documents, taking the files you already have, or the specific contracts or the specific creative content and create new one from it. As well as applying it to security, to identify threats and to prevent them leveraging AI on our platform. All of this is in development, and we'll keep you posted, but we're super excited about it.
In addition to what we talked about collaboration and this very exciting set of features that I just mentioned, we are also working on helping our customers simplify their tech stack. Part of the challenges today, not only because of financial pressures, but also to reduce security profile of a company and to improve on productivity, our customers want to keep it as simple as possible and also maintain it flexible. Box maintains the neutrality of working with all of these different products in a very integrated way, not forcing one or the other. Imagine your legal department is receiving a document that was sent through Google Docs but wants to edit and review and work on it using Microsoft Office. Because we integrate with both, you keep the content secure in Box.
It's compliant, it's governable, but it can be using different tools that we fully integrate with. Similarly, your company might be working, using Slack, but then all of a sudden, you acquire another company that's using Teams, well, we integrate with both. The collaboration and the flexibility of using Box is paramount for the IT departments of our customer base that really enjoys the ability to move, migrate, and merge without the pressure of having to do a cold cut and move to a very different environment. The implementation of the simplification of the IT stack is essential. Data is siloed, and that frustrates users sometimes because it's driving costs and introduces the security risk that I mentioned earlier.
IT admins want to make sure that the modern workflows allow the use of different tools across the board. Lastly, I would mention that the ability to have automation that can connect all of this through a secure platform is essential for our IT customers as well. Now, I mentioned integrations. I think actually we have 1,628, but who's counting, right? We normally say more than 1,500 integrations provide that choice of integration with any of the key players in the ecosystem. In addition to that, we also have the APIs, which I'll tell you in a second. One or two of the integrations I want to highlight. First is the integration with Microsoft. Microsoft is a key tool for many companies.
We continue to invest in the partnership with Microsoft and showing that Box works seamlessly with Microsoft applications. Now, looking at Microsoft Teams, as I mentioned a moment ago, many companies like Owens Corning, NTT, and many others, have been requesting the ability to drag and drop files directly into Teams. Now they want to do that, and then automatically upload those, is linked to a folder granting the permissions that we normally set seamlessly within Box. We also have the ability that we are, you know, now launching with customers to save, you know, team meetings directly onto Box. We have this bi-directional implementation with Teams that you can take, again, content from Box onto Teams or bring what you just created in a, in a, in a meeting and put it onto Box, being the content layer for Microsoft Teams.
Similarly, we have done an implementation with Microsoft Office that allows you to basically move, you know, seamlessly files directly onto Box. Another one that I wanted to highlight, just to mention a couple, is Salesforce, which is a key platform that many of our customers use. They've grown to basically rely on Box for making the entire, you know, implementation, where they take Box web applications, application elements available directly in Salesforce, along with the ability to sign documents or even multiple documents directly from Salesforce. In addition to these two, we have many more enhancements coming for this year, all with the goal of connecting customers with their content across any of these apps, more than 1,500 apps. We want to maintain that in an easy and secure way.
For example, we have heard from customers that are asking for the ability to roll integrations to subsets of users, making it easier for them to enable key groups to leverage the integrations. We have implemented that for Box Sign and Microsoft Office co-authoring, and because it worked so well, now we are extending that across all the portfolio by the end of this year. In addition to that, I mentioned that it's not only this, you know, plethora of integration that we have, but there might be a case where a customer wants to develop something themselves or want to get developers from a third party to integrate with Box.
For that, our developer platform really brings the power of Box Content Cloud into customers' custom apps, where our API-first approach lets customers pick and choose which components of the Box toolkit for their custom apps can be applied while maintaining the security and compliance requirements and standards. This is really effective for the Box Content Cloud to be extended to custom use cases and is increasingly popular. In particular, we have now reached about 1.8 trillion API calls a year, we see that trend continuing to increase very rapidly. With that, I want to hand this over to Manoj to talk through Box's important security plans and do this dive into what we call our top priority. Manoj.
Thanks, Diego. [audio distortion]Hey, everyone. My name is Manoj Jasani. As Diego mentioned, I'm the VP of Security Product Management here at Box. In addition to security, I also manage compliance and governance portfolios. I'll spend a few minutes diving deeper into all the innovation that we are sort of looking to deliver in most of these critical areas. Before that, a quick level set. According to Gartner, the security compliance and risk management spending was $169 billion last year, and it's predicted to grow at 11% even in a recessionary environment like today. When speaking to our customers, security is a top concern and the number one reason they buy Box.
We provide our customers the solutions and capabilities that span all the critical areas, such as securing their content, managing the content through its lifecycle, ensuring they meet industry and regulatory compliance, and have the ability to provision, manage, and drive insights from the content in Box. Let's start with security. As we keep a close watch on the security landscape, we're continuing to see customers deal with, obviously, ransomware attacks. They're fighting to hire talent and retain that talent. They're looking to plug security holes brought on by human behavior, and they're increasingly relying on automation and analytics and AI capabilities, while also looking to consolidate myriad of tools that they have in their environments that they've deployed over the years.
To deal with the complexity of the security landscape, it is actually important to break the problem down into manageable chunks. Our customers think about security through the lens of security frameworks. The NIST Cybersecurity Framework is the most popular one that sort of we come across, which really breaks down security into four critical pillars. Those are, like, identify, protect, detect, and respond/recover. Our customers look to address different content security challenges in each of these buckets. For example, they worry about classifying or understanding risks to their content in the first bucket, while they look to remediate from leakage and recover content from ransomware attack in the last bucket. We at Box are helping them solve these challenges in each of these areas, so much so that the customers are viewing Box as a key security partner.
For example, we help them auto-classify content or stop content from accidental or malicious leakage. We also help them contain threats or restore files to a known good state after a ransomware attack. At the root of it is a trust-based access to the content that's really baked into real-time risks the users or the devices are bringing to their content. If you were to put a Box product lens on it, which you might, you know, the products that you're sort of familiar with, this is how Box Shield Smart Access, Box Shield Threat Protection, the dashboards, and the Box Core security capabilities help our customers in their security journey. Looking forward, we'll focus on most important areas to drive innovation and outcome for our customers.
We'll be going deeper in the classification of content, including classifications that are based not just on keywords, but also on document properties and other heuristics. We will help customers discover all the content they have and help them get visibility into how risky it is. We will ensure that endpoint breaches don't lead to content getting compromised. We enable it via capabilities such as watermarking and endpoint DLP. We will deliver further innovation on getting even more effective at malware and ransomware detections. We will help customers with their recovery workflows in case of content getting compromised or locked by ransomware. We'll also deliver even deeper integrations with security workflows, with tools like SOAR, also known as Security Orchestration, Automation, and Response. In the next few slides, I'll quickly go through some of the highlights in terms of the roadmap that we have in plan.
For example, we'll help our customers detect ransomware more efficiently and be able to recover from it within Box Shield. Provide enhanced anomaly detection capabilities and automatic blocking of unauthorized access to content based on suspicious location or higher device or user risk. Box admins have a critical role within the organizations, we provide enhanced security controls such as MFA and critical actions, blocking unverified domains, et cetera, to protect them from bad actors. Extending our document watermarking capabilities to video, which is one of the fastest-growing media types within Box. This is also a very high-value feature for our media and entertainment customers. Switching gears to content lifecycle management. We help our customers have controls and governance of content through creation, collaboration, and all the way to disposition, while maintaining legal hold requirements.
We provide capabilities such as policy-based retention management, legal hold creation, de-disposing off content based on Governance requirements, and activity insights and reporting. The Box Governance roadmap is focused on innovations around disposition and retention of content through content's life cycle. Retention and disposition capabilities bake into other key Box offerings such as Shield and Sign, which Diego already mentioned, enabling customers to collect and preserve content for legal and security use cases. If you were to sort of dive deeper, here are a few examples of how retention policies can be set up based on admin classifications. This allows the ability to choose a Shield classification as a retention assignment and can be either definite or indefinite. Another example where Box Sign will give organizations the ability to retain and dispose of signed documents, along with their corresponding batch and Sign audit logs based on policies.
We believe that for our customers to put their most sensitive workflows into Box, they fundamentally need to trust us, and we believe the best way to provide that trust is through transparency. That's why we have invested in third-party independent attestations for a wide variety of security, privacy, and compliance certifications. As you can see by the numerous certifications on this slide, we do take a comprehensive and proactive approach to compliance, including certifications such as FINRA, PCI DSS, and many other. Privacy continues to be an increasing focus for organizations driven by content explosion and growing regulations to protect private information of the citizens. Gartner estimates that 75% of world population will have its personal data covered under privacy regulations, which is why privacy is a big focus for us.
In addition to already procured privacy certification, we recently announced that Box has obtained a new privacy certification, ISO 27701, which is an international standard for the collection and protection of personal data. We're also already CPRA compliant, which is a new California privacy regulation ahead of the July 1st deadline. Customers can rest easy knowing that the Box Content Cloud meets privacy information management requirements. As for certifications for the federal vertical, in addition to maintaining our FedRAMP Moderate certification, we will add Box Canvas to the FedRAMP Moderate boundary as well. Our FedRAMP High certification is also currently in the works. Integrations and partnerships continue to be the linchpin of our security and governance strategy. As you can see, we have product integration with most of the well-known products that are critical to our customers' security and governance workflows.
These Box Trust partners seamlessly integrate with Box and extend and complement Box native security and governance capabilities. I think that's it for me, and I hand it back to Diego.
Thanks, Manoj.
Yep.
This is the last slide I had prepared for you to just recap on all the things that we have covered today. The portfolio is so exciting. We have so much innovation coming, and we've covered the focus on protecting the content, on driving productivity, and on simplifying the IT stack for our customers. I think we're going to go now to a 10-minute break, and then after that, I think Steph is going to take the podium and take us through our go-to-market motions. Thank you very much. See you in 10.
In a couple of minutes. We'll let everyone come back from.[audio distortion] Okay, I think we are ready to go. Welcome back, everyone. We love this part of the session because we get an opportunity to bring one of our customers on stage and have a conversation with us. I have the great privilege of having John Stier with us today. He's the Vice President of Service Delivery for Warner Music, and I am going to let John introduce himself. He's been a longtime client of Box, which is wonderful, and has a tremendous amount of experience, and has watched the platform evolve from the very early days. Welcome. Thank you so much for joining us, John.
Thank you.
Maybe we'll start by sharing a little bit about the role that you do. Just a little bit about your job. That'd be great.
Sure. I'm the Vice President of Service Delivery for North and South America for Warner Music Group. Basically I manage service desk, service operations. We do password resets, desktop support, application access, some application support. My team is responsible for the global ITSM system, ServiceNow. We oversee and manage the Box environment, Slack. I also oversee M&A. I'm the tech lead for M&A for the Americas for any mergers and acquisitions that Warner Music does.
That's great.
Probably a lot more, but-
We'll probably come to a few others.
Couple things.
A fun fact though, maybe the top three favorite artists on the record label.
Some of our biggest artists are, you know, Dua Lipa, Lizzo.
Coldplay.
Not necessarily my favorite. Coldplay, Ed Sheeran.
Fantastic.
Some of the record labels, you know, Atlantic Records, Warner Records, Parlophone, Elektra.
Without a doubt.
Yep.
we've all got something from one of the... your artists.
Yep.
without a doubt. John, tell me a little bit about Warner and what were some of the challenges that were facing Warner at the time when they thought about purchasing Box?
Sure. I mean, Warner's prime business service is artist services, right?
Yeah.
Servicing our artists, to get them out to the public. Some of the challenges that we meet is, you know, disparate, less secure, platforms, sharing content, obviously sharing media files is big for us. We're always looking for an enterprise platform that gives us the ability to manage our accounts, securely, most importantly. It's got to be easy to use. Our business is out in the world in the middle of the night with artists at clubs, bars, all the whole music scene, right? What you see on TV. They're doing deals at those hours, so things just have to work. It's got to be easy.
One of the primary drivers, it was sort of a great lead in from listening to Manoj and some of the updates we're doing on the security roadmap. One of the primary reasons was security at the time. Is that correct?
Yeah. I wasn't here when we bought Box. I've only been with Warner since 2019. They purchased Box back in 2012.
Okay.
I've been supporting Box per previous jobs from 2012 also. I know at the time other cloud platforms were not at the enterprise level from when we bought it at previous places. The enterprise features is really key.
Some of the other things that, you told me about, some of the use cases that you've started to deploy as part of the rollout. Maybe a little bit about what you're doing with Shield.
Yeah. We just upgraded to Enterprise Plus, mostly for Shield, also for the increased file storage, size for each file. Shield we're working on now. We're deploying data classification labels, with the policies backed exactly what Manoj was talking about before.
Mm-hmm. Mm-hmm.
The important... like you said, the important thing for us is flexibility, ease of use for the users. The, the Shield and the classifications will allow the content owners to put that extra layer of security on their files when they need it. You know, all the, all the users are collaborating on files. They have access to share, they have access to get content out to people. You know, big thing for us is pre-release content, right?
Yeah.
If we're working with an artist on a new song, very important that that gets controlled. Once it's out, you know, it can be uncontrolled a little more.
Mm.
For the people who own the data, you know, those A&R executives, they know what's pre-released. Maybe there's an admin or an intern or something.
Mm-hmm
...may have access to something, you wanna control that, and they wanna control it themselves without having to call IT.
You were mentioning that marketing uses it for just a ton of marketing materials and assets, both pre-launch and then as things go out into the market.
Yeah. Marketing has access to all the thing. One of the big use cases is our one of the creative service groups for one of the major labels, they've been using Box since its inception at Warner. They have a whole workflow, and they basically have a content repository for their materials, whether it's, you know, a label, sorry, a record label or
A jacket
a record jacket. Yeah.
Yeah.
Sorry, excuse me. You know, whether it's a poster or whatever it might be for a particular artist. They have it categorized by the artist, further down. The content creators upload everything into Box. That's where they store it as part of their workflow. The other marketing, the A&R executives, legal, they have access to all the content at an appropriate level, all managed by the, you know, the head of the creative department.
It's being worked on both internally and externally with...
Yep
...a ton of vendors out in the marketplace that you're working with.
Yeah. She controls that herself. This way, they don't have to ask for anything. Nothing gets emailed out.
Yeah.
They go to the content library, which is in Box, and they can get their materials.
I'm pretty sure that your artists are happy about knowing.
Yeah
level of security that you have in place.
Yep.
You also mentioned that you were thinking about kicking off a really interesting workflow, Relay workflow.
Yeah. We have, our content protection group, is looking at using Relay. They have a company that scopes the web for, anything that might be out there. If this company picks something up, they need to get it into Warner so they can investigate and get it to the labels to say, "Hey, is this something to concern about? Is it not?" They'll be, building out a workflow at Relay to do that.
And-
It could be any one of our labels that's out in the world, right? We have, you know, hundreds of record labels, so we gotta get it to the right eyes.
Just on that point, there's a fairly significant need to bring content in very quickly as you're doing these mergers and acquisitions.
Mm-hmm
...I was just reading recently, just the number of labels that you acquire on a pretty steady basis.
Yeah.
I think you mentioned you were using Box Shuttle, is that correct?
Yes.
As part of the migration.
We use Box in a couple of capacities for M&As. We use it to collaborate during the diligence process.
Yep.
Just ease of use with external collaboration between, you know, our lawyers, their lawyers, the target people to get information back and forth. We've also used the Box Consulting to help us with Box Shuttle. When we acquire a company, their data could be anywhere. It could be on-premise, could be in the cloud somewhere.
Yeah.
We use Box Consulting to help us get that data into our Box account, maintaining, you know, whatever security access levels they have. They help us with training, so you know, the new employees can get up to speed on how to use Box if they're not familiar.
Fantastic.
Yep.
Why do you think there's been such widespread adoption amongst the end users? We love it. Telling us how much they really value the platform. What do you think has been a primary reason for that?
It's definitely the ease of use. We like things to be easy like TikTok, is what we say. Box is, you know, you can really have no experience with the platform, and you can go in and share content. That's really one of the big drivers is that ease. Also, you know, it's secure and that the security and the level of security can be controlled by the users themselves.
The adoption has, as you mentioned earlier, enabled you to take advantage of the entire portfolio by upgrading to Enterprise Plus. What were the couple of drivers for that?
Well, definitely, like we said, Box Shield, the other one was the increased file size. We have one use case is studios, you know, they're working on editing content. They have some on-prem high-speed storage 'cause you have to in the editing suites, that stuff has to be local.
Yep.
They'll use Box as a, as a backup. That larger file size to handle those larger media files really helps.
Fantastic. Are there any other use cases that you can think of now that you have access to the entire portfolio?
I mean, we're definitely looking at the Relay to do that, down the road with more with the smart tagging, around PII data.
Yep.
This way, someone doesn't have to go classify it. We'll use the AI to go identify it and classify it automatically. That's just stuff you don't wanna take human risk with.
Yeah, for sure.
You'd rather scope it out.
Contracts maybe as well, so signature contract management.
Yeah, I'd like to get to use Sign since we own it. We're.
Yeah.
...right now using some other products out in the in the business, and it'd be nice to, you know, you could show some savings there and use it.
To integrate it as part of that workflow.
Yeah.
Fantastic. For sure.
Yep.
If there's anything that you would like to do more with Box, what would that be? You cover such a broad range of services across the entire organization. Where do you think you can continue to drive?
We haven't done any integrations yet to, you know, like Microsoft Teams and getting it out there in the front. I'd like to get that going to make it easier. It's not, it's not our centralized repository for internal. It's more, you know, we use it a lot more for the external sharing.
Mm-hmm.
That'll be a definite benefit 'cause they are working with it internally. Definitely more to go on the Shield. We have to turn on all the monitoring. That'll become big, integrating that into our security management console to get everything into one place. You know, we use our authentication tools do a lot of the security and authentication monitoring, but adding in Box with the regional logins and.
Mm-hmm
... anomalous downloads and stuff will be big, to get that into our monitoring so that we can capture all that. That's on our roadmap to get those implemented.
Fantastic. You mentioned that from a service desk perspective, it's been relative joy to sort of work with your end users, that you don't really have very complicated requests coming in or challenges.
Right. Yeah.
Is that right?
Yeah, we did. I pulled some stats, you know, when I was coming here. We did 90% of our Box tickets are just access requests.
That's it.
The other 10% are mostly, you know, login type stuff related to passwords and usernames. Not too much, feature functionality issues or anything like that, or, my data's missing or anything.
That's fantastic. Did you do much enablement to begin with? Because of the ease of use and how intuitive the product is that you found that the users sort of within their departments are able to sort of work together pretty quickly?
They're able to work pretty quickly. As part of our Shield, we're doing a training, a global training on how to use the Shield. Just to recap, I think a lot of people, they can get in, they can use it, they can do the basics. To show them, to get a training out there to show them some of the other features, "Hey, you know, you could really do this. You could really do that," and get people thinking on how to use it more.
Fantastic. In terms of integrations, I think you mentioned you're doing some integrations with ServiceNow as well?
Yes. Nothing major, but selfishly to save my team some work, we're doing an integration with ServiceNow. Basically about on and offboarding users, using the APIs to automatically create and remove accounts.
That's fantastic.
Yeah.
Quite frankly, it really plays to the cutting costs and complexity story that we talk about. Ultimately, we wanna do whatever we can to help you optimize your technology stack, remove all the things that are causing you a headache to manage or, you know, the noise in the system and making it easy for the end user, ultimately knowing that they can use one single platform for all of their needs.
Right.
The fact that you can very quickly identify how an integration will save you time, money, headaches is exactly what we love to hear from customers.
Yeah
I was showing John earlier our integration with Slack and Salesforce and how we use it internally, and it just saves so much time.
Yeah.
I don't have to think about going everywhere to look for my content because I know it's in one safe place. Anything else you'd like to share about the deployment?
Not that I can... I mean, we covered a lot of it.
You're a happy customer.
Yeah. Yeah, we're happy. I love it. I mean, just the partnership with Box has been great over the years.
Yeah.
Whenever there's a problem, the account team is always there. You know, reporting has been great for when, you know, stuff pops up. You gotta find who's done what when. Whenever there's anything that you can't report on yourself, you know, the Box team is there. Box support is available-
Well, you'll be excited.
whether it's through chat or a dedicated number.
Yeah.
Yeah.
To see a lot of the reporting that's coming out with the admin console.
Yeah
... as easy as possible for admins to be able to work and manage the environments, which is fantastic. You've been with us for over a decade now, from the very beginnings, you've seen the product roadmap evolve.
Mm-hmm.
I shouldn't say this because Aaron's listening, if there was one wish list, I'm gonna let you throw it out at us before you leave.
Oh, man, I didn't think about a wish list.
Oh, that's good. If you don't have one-
Yeah
Aaron doesn't need any more.
No. I'll get back to you on the wish list.
Okay. Fantastic.
'cause I gotta think about that one.
Oh, wonderful.
No, we're happy. It's just, you know, over the last, whatever, 10 years or so, it's, Box listens to what people need. You know, watermarking was one. I know, before I was in, music, I was in TV media.
Yeah.
It was the.
It's important.
... the watermarking of content I know has been in the works for a while, and it's exciting to see that finally come out.
Fantastic.
Even, you know, the file sizes grow over the years.
Mm-hmm.
You know, always in media, the files are always getting bigger, so you guys have been growing with that. That's been great. Even the little things are just making what you have better. Upload links is something that people use now all the time.
Mm-hmm.
It used to be you had to cobble together two widgets to make it work, and now it's just right click, upload link. It's just.
Voila
... enhancing the features that you already have.
That's fantastic.
just those simple things is what makes it easy to use.
Okay. We will continue.
Yeah
to do that. Thank you so much, John. We really appreciate you coming in this weather.
Thanks for having me.
We will let you go, and I will jump into a presentation.
Great.
Thank you. I'm gonna do a swap.
Go. I'm gonna grab a clicker.[audio distortion] Thank you, Josh. Fantastic. All right. Thank you so much, John. That was a little bit about what we do with our customers, one of 100,000 pluses as you heard earlier. What I'm gonna do and then hand off to Mark is spend a little bit of time on our go-to-market strategy. Many of you have heard it before. We are pretty steadfast about a motion that has worked very successfully for us. We're continuing to constantly sort of iterate, but foundationally it has been the right motion for us now for a few years. As you heard from Aaron, we're going to continue to go wider and deeper.
When we say wider, our objective is really to work with as many customers and go across their organizations to go enterprise-wide, or wall-to-wall. Go deeper is really spend a lot of time with our customers to understand how they can truly get the most value and return on their investment with Box. We spend a lot of time, understanding their business requirements and thinking about the use cases. As you heard from John, it's a tremendous example, as you find more use cases, the advantage of moving to Enterprise Plus and our all-in plans allows you to really take advantage of everything that's in the platform. We're gonna continue to drive that motion. We have a huge market opportunity.
As you can see, we continue to help customers retire legacy platforms and a mishmash of things, and we can now, as a result of the product investments that we've made and the innovation, we get the opportunity to play in a very broad range of categories. We see that there's tremendous scope for us to continue to grow this business across all market segments and all industries. With that, this is a tiny sample of some of the clients that we work with. One of the nice things about us is that we work across all size of client, from enterprise down to small business, down to very small businesses. We cross all the major industries, both regulated and non-regulated or unregulated.
We work in, well, Mark will speak a little bit more to this, but in the geographies that we choose to work in, the nine primary markets, we have a growing install base of customers across the globe. We're really committed and focused to ensuring that all of our customers get to take advantage of and really leverage the benefit of the entire Box platform. You've heard from Aaron, you've heard from me multiple times. Those of you who've heard from the very beginning, we have what we like to call our flywheel motion. It's been a very successful part of our strategy here at Box. We refer to it as the flywheel because it's just this customer life cycle that we speak to of landing, adopting, expanding, and retaining customers.
The way to think about it, landing is either landing a new client or landing another department within an organization. Adopting is doing everything we can, internally with our partners to ensure that our customers deploy quickly, on board very quickly, and take advantage of the platform. By doing so, we get the opportunity to help them explore more use cases. As we find more use cases, we then get an opportunity to expand them, we move them up to a higher plan, and they get to take advantage of the products and services within that plan. From there, we look to go enterprise-wide. They work with their partners externally as well. We get to retain them and sign them for multi-year agreements. That has been our motion now successfully for a number of years.
I thought maybe the best way to illustrate that was to share three customer examples. I picked three of my favorite customers who I know very well. The first one is an insurance client. They've been a client of ours for a long time. Actually, all three of these organizations have been a client of ours for between seven and 12 years. This one, well, we now power all of their claims processing, and they use us extensively for internal and external collaboration. Interestingly enough, their original use case was really around internal collaboration. There was a particular department that we were able to work in. It was marketing at the time. That was our first land.
From there, we helped them onboard very quickly, and as a result of that, you can see that we were able to impress upon them the need to really leverage governance. As a result, we helped them really think about their retention policy. Through that process, they deployed a lot more seats across the entire organization, and by the time we got to expanding them, they had actually gone wall to wall at this point. They had identified with the help of our account teams, we had identified that there was an opportunity for us to really help them create this new sort of claims processing workflow, which is what we did, leveraging our platform, Box platform, and our APIs.
Working with a partner and ourselves, they were able to really take advantage of the entire platform, continuing to use everything else that was in the first suite that we launched. We enabled them to take advantage of the entire portfolio and upgraded them to Enterprise Plus, and we signed them on a multi-year agreement. It's sort of the cycle of life, as I like to call it, within Box. It's a really clean way of thinking about land, adopt, expand, and retain. The second client is a semiconductor client of ours. Again, they've been a long-standing client. Very, very similar, so as you think about it, you'll often hear primary use cases initially around security and external collaboration. Once we enable that, we work with the clients very quickly to identify other things that they're doing.
In this instance, they have a very, very large workforce. They started to use us from a mobility perspective, and we very quickly went viral across the organization and we saw them go wall to wall. We started to work with them on a portal. They had hundreds, if not thousands, of partners and vendors that they work with, so we developed a vendor portal with them. With one of our partners, they use us extensively for M&A. They have gone all in on all of our security features. Now we have become the Content Cloud, and they have embedded us across the entire business. Again, a fantastic example of that motion. The last one is a public sector organization who I've worked with and Mark has worked with for some time now.
A great organization. They had a very, very specific requirement, and you heard Manoj speak to this earlier in terms of the certifications and that we invest in. They really had a situation where they were dealing with international agencies, and so ITAR was critically important, and that was our landing use case at the time. From there, we ended up working with Box Consulting, and we did a security assessment, and they went all in on our security features. They ended up expanding across the entire organization because security, as you can imagine, in these industries, this sort of public sector environment, is critically important. They went wall to wall. We continued to develop a number of use cases on top of that, so we expanded.
They went from the initial Suite upgrade. They added platform because they were doing some development with a third party around an environment portal. Finally, we upgraded them to Enterprise Plus, and they are wall-to-wall enterprise-wide. We are the only approved solution to share sensitive information externally, so they really have emphasized and weighed heavily on security and external collaboration. Pretty sort of simple motion for us. It has worked very, very cleanly, and Mark will explain some of the work that we're doing to continue to evolve that. Our go-to-market motion is tightly embedded into our business model, and really, it helps us stay very focused on what are the three primary growth drivers and revenue drivers.
Aaron already alluded to them, expanding users and use cases, driving higher price tiers, and then ultimately improving retention with our continued innovation. What I thought I would do is pretty quickly just do a little double click on each one of these, and then for some of the areas, Mark's gonna pick up and go a little bit deeper. Let me start with expanding users and use cases for going enterprise-wide and driving seat growth. There are a few ways you can do this. Obviously, from a target region growth, we're really focused on continuing to grow our enterprise and our commercial SMB and mid-market business in the US.
We have a great leader that we hired a year and a half ago in Europe, who's developed a strong team, and we're really doubling down on the UKI and Germany as two of our primary markets in Europe. Japan continues to have really strong growth for us, and Mark's gonna actually do a deep dive on that so you can get a bit of an understanding of why we think there's tremendous opportunity in Japan. There's a ton of opportunity for us to land new deals, but actually, most importantly, to really grow and continue to work with our installed base. The second one is high-value use cases. There's lots of ways we get to do work with our clients in this area.
Obviously, from a horizontal perspective, and you heard from John, there are many ways to take advantage of the products and features within the plan. Securities of the utmost importance are between governance and shield and encryption keys. Really important for us to make sure that they lock down their content and it's highly secure. We are seeing an increasing amount of vertical plays that we work with third parties. Mark will talk to a couple of these, but we have partners, SIs, ISVs that we work with on some pretty specialized vertical solutions as well. Recently, we've seen great traction in the state and local government marketplace and across all of our industry verticals. Our three primary ones, the regulated ones, financial services, public sector, and life sciences.
M&E, I think, is probably one of the earliest verticals that we worked in. I think, you know, Aaron sort of loved that space, and it was kind of where we started our business I think in many cases. There's a huge opportunity for us to continue to work closely with customers on a variety of use cases. That's what we do with our teams sort of day in, day out, and with our partners. We really get the opportunity every time that Diego and Manoj and the entire product organization continue to bring more innovation to market, we get the opportunity to work more closely with our clients. The introduction, for example, of Box Sign, really important.
Gave us an opportunity to help our customers think about ways to potentially cut their costs, remove some complexity from their workflows, and integrate everything on one single secure platform. That innovation remains critically important and at the forefront of our discussions with the clients. New logo acquisition. Mark will spend a little bit of time on our partners, but we continue to leverage the ecosystem as much as we can across all of our geographies and markets. We did a lot of work also. We want customers to have choice, so you should be able to work with us in multiple ways. We made a significant amount of investment on the digital platform during the pandemic when we all had to kind of shift gears.
As a result, we've really built a very strong engine behind our digital platform and our e-commerce platform, allowing customers to upgrade whenever they need to online as well, without necessarily having to work directly with us or indirectly with a partner. A lot of work being done there in this space. There's some ways that we continue to expand the number of users by leveraging both horizontal and vertical use cases. You can see by this slide, we've really seen tremendous traction in our 100K+ accounts. We see a lot of opportunity for us just to go wider and deeper as we work with these enterprises across the globe. We will continue to do more on that front.
In terms of driving higher price per tiers, there are a number of ways that we've been thinking about this as well, and obviously, the progression and evolution of our plans from the very first time we launched Suites to where we are today with Enterprise Plus has definitely put us on this incredible trajectory to do more with our customers. So we've been able to spend a lot more time thinking about how they can leverage each of the products and features in the portfolio. You just got a sample of that from Diego and Manoj today. We spend a lot of times, our account teams, and our partners from a coverage perspective, spend a lot of time with our customers, helping them understand how to really take advantage of that.
We work hard to get them onboarded quickly, and deployed, and adopted more broadly across the organization, and we work with all the different lines of businesses to ensure that they're taking advantage of that. We've got a lot of opportunities to continue to drive that. We also, as a result of this flywheel motion, it enables us to have a really good, clean, sort of renewal upsell motion. Again, the introduction of the new plan has allowed us to do that. We have an opportunity to help customers understand the benefits they can derive from going all in on Box and taking advantage of some of the rich features that are coming to market and upgrading them into the higher plan from their current plans.
We've been able to really think about what does that renewal motion look like. We've been able to move customers much earlier as well so they can take advantage of this, and then this continual sort of life cycle that we do. The other area that we've been focused on is really thinking about helping customers sign multi-year agreements to make sure that we give them plenty of runway to take advantage of the broad adoption. From the earlier customer slide, you'll see that once they purchase a plan, we want the opportunity to be able to go really deep and really wide with them. We're looking at ensuring that they have ample opportunity to continue to take advantage of it over a multi-year agreement.
As I mentioned, we've made a lot of investments from a coverage perspective, both from an account team, a customer success perspective, and even in the digital space. What we wanna do is make sure that our customers are aware of all of the rich products and features within their plans, that we educate them on them, that we onboard them as quickly as possible. There are lots of ways for us to do that, both directly and indirectly with partners, and from an online perspective, in terms of Box education, community, the in-app development that we're doing, the product development that the product teams are doing. All of those things allow us to ensure the customers are taking advantage of their investments. You'll see, we launched Suites only a few years ago.
It feels funny how time flies. We've been able to see this steady improvement of price per seat as a result of bringing more rich products and features into the plans. We are less than two years, I think now, in Enterprise Plus and continue to see the price per seat improvements, and we'll continue to do that as we bring more products and features to bear as we increase our and evolve our plans. In terms of our pricing and packaging philosophy, someone was asking us about this just recently when we were talking about this. I guess there are three things that we consider as we sort of discuss what the options look like as we move forward.
New product innovation, new features, new platform capabilities are definitely one vector that we think about, is this something that a customer will really value and want? One of the things I love the most is when a client says, "I don't know what I'd do without Box." They do say it a lot, like, "We run our business on Box." We really think about new product innovation as a key driver to whether or not we should be introducing another plan and what the timing of that looks like. Have we reached a critical mass? At which point do we think there's an opportunity for us to add more features and products and move our plan? Finally, the customer willingness and desire to do this.
We leverage customer advisory boards and product advisory boards a lot. We get a lot of market input in terms of the work that we're doing from a product roadmap perspective. As you can imagine, they always want more from a development perspective, as we think about that motion, we think about when it's the right time to introduce a new plan. That's what we've done for the last few years, just to give you some context around that. Finally, improving retention to really just drive broader product adoption and continued innovation.
I like to talk about price to value and, you know, John and I had a conversation last week, and it's interesting, at his prior customer and then, where he worked and then here at Warner, they, the value that they get from leveraging Box, he said you can't really put a figure on it, because in his mind, their content is now so incredibly secure, and that's the business they're in. Like, their clients expect them to be incredibly protective of their, of the information, be it the songs or whatever else it may end up being. From a price to value perspective, we obviously want to work closely to ensure we have the most flexible and commercial arrangements with our clients, but quite frankly, we're really focused on ensuring they're getting the best value on their investment.
We are in the process of constantly asking them about their use cases, but how can we remove some costs from the equation? How can we remove complexity? As you heard, just the ability to manage these very large environments when you have thousands and thousands of employees thinking about how best to optimize the technology stack. Price value becomes critically important for us and for our clients as we have these conversations. The ecosystem is really important as well, and I'm only gonna touch on this because Mark's gonna speak a little bit to some of the work that we've been doing. Diego mentioned the integration work. We have, you know, over 1,500 partners. We work very closely with, you know, a group of them.
These integrations are really important so that the customer has a seamless experience when working in Box. We've always done a lot of work with Microsoft, doing a tremendous amount of work with Salesforce at the moment, and lots of examples where customers really wanna understand how to leverage the integration or leverage our APIs and develop applications, as you saw from the three customer examples that I mentioned. Finally, product innovation. It's really at the center of sort of the world for us and for our customers, constantly asking us what's coming. As you heard from both Aaron and Diego, a lot of innovation in this AI space. We're super excited about it.
Trying to keep Aaron tempered, well tempered on this is very difficult because I've been in this industry for a long time now, and it's probably a key milestone in terms of technology innovation. We wanna be at the forefront of that. Our customers expect that of us as well. We were really ecstatic when we brought Sign to market. We saw a tremendous opportunity as part of the business workflow in our customers to help them with virtual whiteboarding and Canvas being GA'd shortly. There's more to come. We're really excited about that innovation. It's critically important that we bring this to market as quickly as we can. Finally, I sort of just wanted to illustrate this. This is a slide from actually a client that we work with.
What it's supposed to depict is that very clearly, the technology stacks have gotten bigger, and Mark has some stats that he always throws out about just the number of products and technology, types of technology that a customer needs to manage in their environment. What we try to do is help our customers better understand ways in which they could potentially cut some costs, remove some complexity, and leverage the entire Box platform to support them. We did this exercise. This is a very large organization that, as you can see, has a plethora of technologies, both new and some legacy technology. This is a great way to help drive ongoing retention.
We're continuing to have these conversations with the customers, which enables us to really, see strong retention overall across the organization. That is a brief overview, very brief. Mark and I can spend days talking about this, so being asked to do it in 12 minutes is actually quite difficult. That's a brief overview of our strategy. I'm gonna now hand off to Mark, who will go a little deeper into some of these sections. We look forward to taking some questions later. Thanks, Mark.
All right. Thanks, Steph. Hi, everyone. I'm Mark Whalen. I'm the Chief Revenue Officer at Box, and I'm here to talk to you today about our sales strategy, covering some of the same themes that you've heard from Steph. Let's get going. Really what we're all about this year is that long-term strategy for profitable growth. I'm coming up on four years here at Box, and it's just been getting easier and easier each year for us to get the team to effectively sell Box in all markets around the world. A lot of that is because as the platform has evolved, the messaging and the positioning, but most importantly, the capabilities of the platform have broadened. That puts us in a position today where we can really go to customers and deliver on three things.
We can help you cut costs and complexity, which is great in times like these. While we're doing so, we can help you improve your security posture. That's great in times like these. While you're at it, you can delight your end users. It almost seems too good to be true that you can cut costs and complexity, improve your security posture, and give your end users a better user experience. I want to share with you a little bit about how we're bringing that to market and what that strategy looks like. Firstly, we have a broad-based business, and our customer base is highly balanced around the world. We're balanced from a geography standpoint, with about 2/3 of our business coming from The U.S. and about 1/3 coming elsewhere. We're not overly concentrated on any industry.
I'll do a double-click on industries. We have a very well-balanced business across industries. You see the larger chunks in that donut chart there are industries where they have a lot of large files of highly sensitive content. We do very well in financial services and life sciences and public sector. We'll do a little double-click on that. We're very well-balanced from a segment standpoint. We sell from large enterprises to midsize enterprises down to small business, and we have a frictionless kind of online model as well. We're fairly well-balanced from a new logo and install base basis. About 80% of our business comes from our installed base and 20% for new logos. That 80% sort of it's good to keep it at that number when you're in subscription.
A lot of your selling happens at the renewal date. By definition, that install base number sort of gets bigger and bigger, and keeping a good chunk coming from new logos creates a good future. Let's take a double click on countries that we sell into. We have a top nine strategy. These are countries where we have boots on the ground. These are the largest enterprise software markets on Earth. We do sell into adjacent countries, and we will suitcase into other markets, but the rest of the world we primarily cover through partners.
The reason why we are intensely focused on these nine countries is because in order for us to deliver on that land adopt expand motion, it's not just putting in a seller from my team into that country, but in order for us to make a customer successful, we need a salesperson and an SE. We need marketing, we need legal support, we need customer success. It takes really the whole of Box to make our customers successful, and we learn that very clearly. Every time we're tempted to go to a country that's not on this list, it's generally better to double and triple down on those large enterprise software markets like Germany, Austria, and the ones listed here. That's our country strategy.
We do business all around the world in multiple countries, but this is where we have boots on the ground, and we're making a heavy proactive investment. Amongst those countries, Japan, as many of you know, has been a very successful market for us, and we're thrilled about the opportunity for continued growth in Japan. I'm going there in a few weeks to meet with customers and partners. There's really three growth vectors for us still available to a great extent in Japan, and the first one is really untapped verticals. We've been very successful in a few verticals, but even in those verticals where we've had a lot of success, like in architecture, engineering, construction, there's still a lot of TAM available for us.
Some of our largest verticals on a global basis, like financial services, are relatively untapped for us in Japan. We have massive growth still available to us in a number of verticals. In our installed base, we still have great growth from a seat penetration standpoint. You can see in there in the middle, lots of opportunity for us to go from what are often BU deployments in large Japanese organizations to go wall to wall in those organizations. That's the source of many of the big deals that we see coming out of Japan. In Japan, we still have a huge opportunity to upgrade many of our customers in the installed base up to Enterprise Plus.
Huge growth in verticals with new logos, huge growth and seat expansion in the installed base and huge growth in terms of upgrading those customers. Taking a double click on industry verticals, you've all looked at thousands and thousands of bubble charts, you know the upper right is the good place to go. The bubble sizes are the revenue that we are realizing out of these different industries. The ones on the upper right are the ones that have the highest TAM, upper right means that we have the most expansion opportunity. As I said before, life sciences, public sector, financial services, we do very well in those markets. We're doing extremely well in professional services over the last couple of years.
Little bit of a catch-all business, just think of law firms, accounting firms, any sort of a business that runs on a project or on an hourly basis. Those businesses, as you all know, are heavy on deliverables, heavy on documents and content that needs to be shared internally and externally, a really good solution for that market. Steph mentioned a little bit on M&E. That would be down on the lower left. Doesn't mean it's bad. We like all these verticals. It doesn't have the same growth opportunity 'cause it's such a concentrated industry, we do extremely well in that industry because we're such a great platform for managing highly sensitive content, large file sizes and especially over these last couple of years, when all these creatives were sent home during the pandemic, and they had to keep making TV shows and movies.
If you watched the Oscars 2 nights ago, many of the films that were part of that event were made on Box during that creative process. The files were stored on our platform as people were collaborating on the files during the filmmaking process. We do very well in those industries, lots of room for growth. Double-clicking a little bit further, you know, public sector's been a very exciting market for us. One of the businesses that I'm most excited about for growth this year is here in the U.S. in our state and local business. We've been had a lot of success in the court system. Think about sensitive content.
When you're in the court system and evidence data is moving back and forth between, for example, a police department and a county court system, that content, it could be body cam footage, it could be photographs, it could be depositions. That content needs to flow back and forth between the court system and the law enforcement agencies. Retention policies are critical. It needs to move from the police department over to the court system for a duration. Then it needs to go away. We're really an ideal platform for that. We also have a key certification which is called CJIS compliance, which makes us compliant in these use cases. That's a repeatable use case that we're seeing across all 50 states, and we're seeing it pop up around the rest of the world as well.
Lots and lots of opportunity for us to grow in public sector. We do very well in retail and CPG, and I think I've made the point on M&E. From a segment standpoint, we sell to large enterprises, midsize organizations and small businesses, and this is really critical for us for a couple of reasons. First of all, there's huge opportunities for growth across all those segments. Importantly, as a technology provider, it puts a tremendous amount of very valuable pressure on us to make a platform that meets the needs of the world's largest and most sophisticated organizations. If we can deliver on the security and the integration and the governance requirements of the world's largest financial services institutions, government agencies, media and entertainment organizations, then we're probably going to meet the needs of the world's smallest companies, like my dad's furniture store.
We have to be able to deliver on the most complex of features to support those large enterprise clients, but we have to do it in a way that is easy to use so that SMBs can use it. That's been a really critical part of our technology delivery model. It's also very important from a career pathing standpoint and from an AE productivity standpoint because we are able to hire account executives right out of college or in the early stages of their career, and we're able to move them up this pyramid over their careers. So that when we get to our enterprise business, we hire, you know, say, half of those reps from the outside, but half of them we promote from internal. When we promote folks internally, they're already trained up on Box.
They already know everything about the Content Cloud. They know how to do business inside and outside the company, and the only learning for them as they move up segment is just in the more complex selling motion, larger procurement organizations to deal with, more complex buying cycles with more departmental approvers on the deal. That's the only thing you have to learn. They already are sort of battle tested on selling Box. That's been critical to our success. Our messaging, which has really evolved over the years, as I mentioned, as the platform has evolved, is resonating very strongly around the world in all segments and all geographies. It's no surprise because in economic environments like right now, where some organizations maybe are pulling back on budgets, the bad actors are not pulling back on the security threats.
Our security messaging is going extremely well in all markets. It works all day, every day. In an environment today where we can help cut cost and complexity, that's a really key message. The data point that Steph mentioned is from the Okta Annual Businesses at Work study. What Okta found just this last year is the average enterprise has 187 SaaS applications. The year prior, it was just 175. Make no mistake, that's the average number. When I talk to extra large organizations and I share that number, they laugh and say, "Oh, we're way above that." They're up at 300, 400, 500. I've heard 650, 750. That's just way too many SaaS applications.
What we're seeing in the market is really a replay of what we saw in the client server era, where the long tail of client server applications got out of control, the big vendors came in for consolidation. Every CIO I talk to is thinking about how to cut costs and how to cut cost and complexity out of their environment. We're really an ideal platform to do so because we can become the content store for all of those 187 SaaS applications. As I mentioned before, while you're doing it, you cut cost and complexity, you improve your security posture, and you delight your end users. I mentioned earlier about that 80-20 mix of installed base versus new logos.
It is critical for our future that we're always bringing on new logos, and we had a very successful year last year on the new logo front. It is harder to sell new logos because, you know, by definition, every prospect out there is vended. It's not like they don't have a place for their content. We have to find a way in. Very often, it's security, sometimes it's cutting costs, sometimes it's an external collaboration use case. Because it's harder, our sellers sometimes will, you know, take a run at a new logo, and then they'll flip back to their installed accounts. We put a program in place last year to have some very, very intense focus on a named list of about 3,000 of the world's largest customers, sort of lighthouse accounts that we set up as must-wins.
This program was phenomenally successful. We closed over 60 net new logos from this list. As you know, you understand this selling motion of ours of land, adopt, expand, these are the logos that are gonna become our 200, 500, and $1 million accounts in the future because we were able to bring them on the platform last year. Once we bring those customers on the platform, we make them wildly successful, and we get them to grow and grow and grow. In the two blue boxes there, you see the number of seats that we've sold, and then we have this great expansion opportunity in that installed base, which is the 7x opportunity.
There's the rest of the world that's available to us, all those other accounts that are that 45x growth opportunity in those new logos. We're rerunning that program again this year. It's going to be even more successful than it was in the prior year. Our partner ecosystem is really critical to our success. We have three types of partners. We have our ISV partners. You've heard today about the 1,500 pre-built integrations. I've kind of bucketed two partner types on the right, both resellers and SIs. As the platform has continued to grow and become more complex and we're supporting more complex workflows, more complex use cases, that really creates more opportunity for that SI ecosystem to do work with us. Make no mistake, SIs, they don't like just doing implementation projects.
The way that they do big SOWs is when there's major integration work to be done, and that's become a very exciting area for us. Really more importantly, is when there's major business process change. Think about, for example, electronic signature. When we are reworking a full contract life cycle that includes the way contracts sort of, or quotes move through a quoting engine, go out to the customer, get signed, and come back, these are major workflows, and that creates great partnering opportunities for us with our SI ecosystem. To give you a few examples of what those deals look like, we closed last year a large deal with a US financial services organization, along with our partner, IBM, and this was a big security use case, and it also includes retiring a lot of legacy file shares.
In Europe, we closed a deal with a multinational logistics company, and this one is a really exciting trend that we're starting to see repeat itself over and over again. This is a customer that's been on SAP on-premise for over a decade, and they're migrating to SAP's new cloud offering, which, by the way, every SAP customer will do over time. Along with doing so, they had to retire their legacy ECM tool that was integrated with SAP. They had an old ECM implementation that housed all the unstructured content and documents that were associated with their usage of SAP. They had this choice to make. We have to move from SAP on-prem to SAP Cloud, but we don't have to move this legacy ECM thing. We have to move to the cloud.
We might as well migrate to a modern multi-tenant, born in the cloud, pure cloud platform. Content Cloud. That's what they did. We have a partner called VersaFile that is that integration piece between us and SAP, and we are now going to be the content store for this massive SAP implementation in the cloud, and we're seeing that one repeat over and over and over again. I think I covered the court system one in public sector. That's a super repeatable use case that we're gonna be doing more and more of. We're continuing to invest in our sales force. We're gonna be increasing our sales capacity, so we can support pipe gen efforts. That's really critical for us in this environment. Our salespeople in the current environment really need to be supercharged as pipeline generators.
We need more pipeline entering months and quarters in this environment than we did in the prior environment. Enterprise Plus, I think we've covered quite nicely here today, but that's really been a big growth lever for us, and we're gonna continue to bring new customers on Enterprise Plus and to upgrade more and more of our customers in the installed base. We're going to continue our investment in enabling our salespeople, so we can drive higher levels of productivity per head, and so we can shorten ramp times of our new hires. To wrap things up, so we're all about that land, adopt, expand, and retain motion. We'll continue to focus on expanding end users and use cases, driving our customers up into the higher price plan tiers and to improve retention.
With that, I will hand over to Dylan, who will talk about our financial strategy.
As noted, I'm Dylan Smith, Box's Co-founder and Chief Financial Officer. Far today, you've heard how our Content Cloud is evolving to address our massive market opportunity and how we're delivering full value of Box's platform to our customers. I'm gonna walk through how this strategy drives our business model and our plans to significantly improve our financial profile in the coming years, resulting in a combined revenue growth plus free cash flow margin outcome of at least 45%. I'll begin with an overview of the results we've delivered this past year. I'll walk through how our product innovation and Suites adoption is driving steady improvements in our underlying customer economics. After that, I'll explain why we're so confident in the foundation that we built to deliver durable revenue growth and continued margin expansion over a multiyear period.
I'll discuss how this profitable growth, combined with our disciplined capital allocation strategy, will allow us to deliver sustained shareholder value while steadily executing toward our long-term target model. This past year, amidst a very dynamic environment, Box not only made significant progress in advancing our product and go-to-market capabilities, but we also delivered against the three key financial objectives that we laid out at the beginning of the year, accelerating revenue growth in constant currency, expanding operating margin, and delivering shareholder value through our disciplined capital allocation strategy. We experienced escalating currency headwinds throughout the course of last year, and we saw a gradual softening in the macroeconomic environment in the second half of the year. Despite those headwinds, we met or exceeded our initial expectations for the year on an as-reported basis with even stronger results in constant currency.
On the left, you can see the initial expectations that we had laid out, and then on the right, what we ultimately delivered, both on an as-reported basis and then in constant currency. Going from top to bottom, we achieved our FY23 revenue guidance while absorbing a 4-point headwind from FX, which was three points higher than our initial expectations. While billings growth was slightly lower than our revenue growth, in constant currency, billings grew at a healthy 15% clip. We expanded operating margin by more than 300 basis points to 23%, which was ahead of our initial expectations.
That result was driven in large part by our outperformance in gross margin due to the cost efficiencies that we achieved while gearing up for our public cloud migration, which in turn drove our gross profit growth of 17%, a full 4 points ahead of our revenue growth. This focus on profitability, combined with the reduction in total shares outstanding, enabled us to deliver an EPS outcome above the high end of our guidance, even on an as-reported basis, landing at $1.20, which was an increase of more than 40% year-over-year. Throughout the year, even as we experienced those escalating currency and macroeconomic headwinds, we remained committed to and ultimately delivered against our initial target of achieving revenue growth plus free cash flow margin of 37%.
In summary, FY23's strong results demonstrate the resiliency of our business model and our team's strong operating discipline. Moving beyond the metrics that we guided to last year, our remaining performance obligations, or RPO, grew faster than revenue and billings as we had expected, landing at 16% growth year-over-year or 21% in constant currency. Our strong RPO growth was largely driven through backlog and long-term RPO growth of 24%, which was fueled by early renewals and longer customer contract durations. Importantly, our customers have been increasingly signing multi-year commitments with Box as we become a more strategic partner in powering their IT strategies. While this long-term RPO won't be recognized as revenue this year, it does provide us with better multi-year revenue visibility.
Over the past two years, we also expanded our free cash flow margin by a full eight points. As a result, we've doubled the free cash flow that we generated last year over two years prior to that. As we deliver further margin expansion going forward, you can expect our free cash flow to continue growing at a rate well ahead of our revenue growth. We're squarely focused on managing equity dilution, and we reduced equity issuances this past year, in large part due to our workforce and location strategy. At the same time, our strong and increasing free cash flow generation enables a robust share repurchase program, which is a key component of our capital allocation strategy. As a result of these two initiatives, we're able to reduce total shares outstanding by more than 3% this past year.
Going forward, you can expect to see us continuing to gradually reduce total shares outstanding on an annual basis. Putting it all together, as I mentioned earlier, our operating discipline allowed us to navigate macroeconomic and currency headwinds and to deliver against our rule of commitment of 37% last year, which we had raised from 35% at the start of the year. This demonstrates our ability to deliver profitable growth and marks the third consecutive year that we met or exceeded our commitment to significantly improving our financial profile. You've already heard a lot about how Suites has been embraced by our customers and how that's leading to higher value use cases. Now, I'm gonna dive into how our customer and revenue base have been evolving as a result.
The value that we've been adding to our Content Cloud overall and Suites adoption in particular, have been critical drivers of the improvements that we've seen in our overall customer economics. We'll compare the economics of Suites customers with non-Suites customers in just a bit, and for now, we're gonna look at the economics of our customer base as a whole. Going from left to right, as of the end of this past year, we now have roughly 1,650 customers paying us at least $100,000 annually, which is up 16% year-over-year. As Steph outlines, we've seen an increase in price per seat of 18% since we launched Suites, including 5% this past year.
While the current macroeconomic environment has been putting pressure on our seat expansion rates, our pricing power has remained resilient and has continued to improve throughout the past year. While the majority of that pricing improvement is attributable to Suites adoption, we are also seeing some pricing improvement on a like-for-like basis. After launching Suites less than four years ago, Suites customers now account for 46% of our total revenue, which is up 11 points year-over-year. Over the past couple of quarters, more than 90% of our 100,000 plus Suites deal sales have been Enterprise Plus, which is our highest tier Suites offering. On the right, our full churn rate improved year-over-year to a best-in-class 3% annualized, where we expect it to remain throughout the year ahead.
Now I'm going to revisit what our revenue base looks like today through the lens of what it means for our business model. 97% of our total revenue is recurring, and combined with our 3% annualized churn rate and longer contract durations, we have a highly predictable revenue model. As Mark mentioned, international markets now represent a third of our total revenue, up five points over the past couple of years as we've driven strong growth internationally, most notably in Japan. Our horizontal product allows Box to serve customers across all industry verticals. One note is that Mark showed the top three industries in terms of where we're most focused and where we see the largest long-term opportunity, whereas this shows where we have the greatest penetration today.
Those top three industries, financial services, professional services, and life sciences and healthcare, add up to 39%. We tend to see the strongest traction in industries with the highest security and compliance requirements given our differentiation in those areas. On top of being a very horizontal product, we also have very little customer concentration. If you take financial services, for example, which is our largest vertical, no single customer represents more than about half a percent of our total revenue. Outside the top three, we're starting to see more momentum with government customers at both the federal and the state and local levels, and we see a huge opportunity here as you heard from both Mark and Manoj.
Over the past year, the various segments of our business have grown at fairly similar rates, so the segment breakdown has remained fairly stable year-on-year, with more than 60% of our revenue coming from our enterprise customers. As we've continued to diversify our revenue base and generate stickier use cases, our business model is becoming more resilient to any headwinds that impact specific geographies, industries, or segments. Let's now shift to our large customer growth, which we segment into 100,000 plus, 500,000 plus, and $1 million plus customers in terms of annual contract value. All three of these populations grew in the double-digit range this past year and by more than 30% over the past two years, which demonstrates the power of our land, adopt, expand, retain business model at work.
Healthy large customer growth is an important driver of our overall growth as this population of accounts and customers now accounts for roughly 2/3 of our total revenue base, up from about 60% a couple of years ago. Importantly, the net retention rate of o ur 100,000 plus customers is several points higher than our sub-100,000 customers, even when you exclude the impact of the upsell that moved them beyond that 100,000 threshold. In recent years, we've seen an increasing contribution to this large customer growth coming from our commercial segment as Enterprise Plus and high-value platform use cases are now more regularly driving six-figure customer contract values even in our smaller customers. Entering to our $1 million-plus customers there on the right, a full two-thirds of these customers have now adopted Suites.
As yet another example of the power of our compounding model at work, more than 85% of these million-dollar-plus customers that we have today were initially paying less than $1 million annually, and they continue to grow at a healthy clip, as more than half of those million-dollar customers have increased their annual spend with Box just over the past year alone. Now we'll zoom back out to our overall customer base and look at our net retention. As a reminder, our net retention rate has three components: seat growth, pricing changes, and churn. The latter two of those have remained fairly stable over the past year, although in the back half of last year, our net retention rate has been pressured by lower seat expansion due to the macroeconomic environment.
Over time, as seat expansion rates recover and as we continue to drive higher Suites penetration, we aim to improve our net retention rate from the 106% that we're expecting to deliver in this year ahead. We've clearly talked about Suites momentum quite a bit today, as driving Suites adoption has been a core company-wide focus for the past few years. This slide demonstrates that these efforts are paying off. Our Suites attach rate on 100,000 plus deals was 72% this past year, which fueled an 11-point improvement in our Suites penetration to 46%. A year ago, we said we expected to have the majority of our revenue coming from Suites customers by the end of fiscal 2025.
Given the strong Suites momentum that we've been driving, we now expect to achieve that milestone by the end of this year, a full year ahead of schedule. I'll discuss the financial implications of the Suites adoption in just a bit. The customer momentum and customer economics improvements that I just discussed provide the foundation for us to deliver durable revenue growth and continued margin expansion in FY24 and beyond. I'll walk through some of the key initiatives and financial outcomes that we're most focused on going forward in order to deliver against our long-term target model. I'll start where we left off last section with Suites momentum.
As mentioned, we expect the majority of our revenue to come from Suites by the end of this year, and then two years later, expect that contribution to be roughly 65%, driven by the steady adoption that you're seeing in the chart on the left. The right, you can see why Suites adoption is such a powerful driver of our financial model. Suites enables higher-value, stickier use cases, resulting in significantly stronger customer economics. Note that this non-Suites population includes customers both on our basic plan as well as customers who have adopted add-on products but haven't yet adopted one of our Suites. I'll now provide a little more color into the trends that we're seeing, going from top to bottom.
To start, our typical Suites customer pays four times what our typical non-Suites customer does, driven both by higher price per seat and by more seats. We continue to see a roughly double, a rough doubling in price per seat when comparing Suites customer pricing to the pricing of our basic service. As Suites enable more high-value use cases, that leads to much broader deployments as well. This higher pricing translates directly into higher gross margin for Suites customers, roughly 10 points higher than for non-Suites customers. The majority of our future gross margin expansion will come from the impact of our public cloud strategy and more efficient service delivery, we also expect to see continued gross margin tailwinds coming from Suites adoption.
While our Suites customers aren't immune to seat expansion pressures that we've seen in the current environment, they continue to generate stronger seat expansion rates and stronger retention rates, resulting in a net retention rate that's seven points higher than our non-Suites customers. I'd note that this analysis excludes customers who move into or out of Suites during this past year in order to provide a normalized comparison of our customer economics. That difference in the relative customer economics of these customer types means that as we migrate more and more customers into Suites, that mix shift will lead to an even stronger financial profile over time.
As Aaron and Steph mentioned, we also expect to introduce higher-tier plans beyond Enterprise Plus in the future, which means that over time, even our Suites customers will have an upsell path to get more value out-of-box. I'd emphasize that we remain committed to consistently improving our overall financial profile in the years ahead. As we've discussed, this year's Rule of 45 will be impacted by lower revenue growth expectations due to the challenging macroeconomic environment, in addition to currency related headwinds of roughly 400 basis points. Beyond FY24, we expect to steadily improve our financial profile with an emphasis on margin expansion, resulting in generating a Rule of 45 of 40%-42% in FY25, 42%-44% in FY26, and at least 45% longer term.
While we expect the majority of this improvement, to come from margin expansion, the product innovation, sales motion optimizations, and sales capacity that we've put in place set the stage for us to re-accelerate growth from the levels that we expect this year as the macroeconomic environment begins to recover. Regardless of when that happens, we're committed to achieving this rule of trajectory. As we've noted, our free cash flow margin expansion will be a key driver of those rule of improvements over the next few years.
As we expand our free cash flow margin beyond the 24% that we delivered this past year, we expect to generate a free cash flow compounded annual growth rate of 20% over the next three years, and we're on track to deliver against the commitment we made last year to generate a 25%-30% free cash flow CAGR from FY22 to FY25. You can expect our free cash flow margin and our non-GAAP operating margin to follow a similar trajectory in the coming years with our free cash flow margin coming in slightly higher due to working capital dynamics. Both of these key profitability measures will benefit from our public cloud migration as capital lease payments and data center expenses wind down throughout the year.
Now I'll dive a bit deeper into operating margin, where we expect to expand these margins by roughly 10 points versus last year's result to deliver a long-term operating margin of 32%-35%. We think about this long-term horizon as three to five years out from our current fiscal year. We've created a strong foundation to deliver profitable growth, and we're committed to driving operating leverage across the business. As you can see on the left, we expect to deliver nearly half of this operating margin improvement through gross margin expansion. Our public cloud strategy is a key driver of our confidence in this continued gross margin expansion, which I'll dive into in just a bit.
As we've mentioned, we also expect continued Suites momentum and product innovation overall to fuel further pricing improvements, which would be tailwinds to our gross margin profile. Turning to some of the other key initiatives that we'll be focused on in the coming years, one of the big ones is around advancing our workforce and location strategy. Over the past three years, the majority of our headcount growth has been in Poland. That's a site we launched 2.5 years ago and which now accounts for 10% of our total employees. Over the next three years, we expect to more than double the percentage of our employees who are in low-cost locations and will be evaluating other locations over time to expand our available talent pools and to drive additional leverage.
The impact from our workforce and location strategy is most pronounced in our R&D teams, and we're building out centers of excellence in Poland for several G&A functions as well. We've really built strong cost discipline into the fabric of how we run the company and will continue to drive efficiencies across other categories of spend. That's everything from our external labor strategy to systems automation to optimizing our real estate footprint. On the go-to-market or sales and marketing efficiency side, there's a lot we're doing in terms of really focusing where we put our investment dollars.
We do expect to improve our sales force productivity over time, both as a result of Suites and that more efficient sale, as well as our approach to really targeting our investment dollars in the most productive segments of our business. We've also been seeing a higher ROI from our marketing programs, especially, and in large part due to the investments that we made a few years ago in driving more efficient digital channels. Finally, we expect to see some natural business model leverage as we continue to scale our highly profitable renewal base. All five of these initiatives are well underway and already delivering bottom-line improvements, which is a big reason, that we're so confident that we'll be able to generate further leverage as we execute against our long-term operating margin target.
Turning to gross margin expansion, first, as a reminder, in the first half of this current fiscal year, we'll see duplicative expenses peak before winding down the servers that we manage. We expect to deliver gross margin of roughly 78% in the back half of this year and then expand from there. To highlight just a few of the benefits that we're already seeing from our public cloud strategy, which we expect to more fully realize starting next year, first, this strategy allows us to rapidly scale our infrastructure and deploy services wherever and whenever they're needed to match customer needs, and that minimizes unused server capacity. Running fully in the public cloud also simplifies our internal operations and allows to shift our engineering and operations team's time away from managing servers and toward delivering more product innovation for our customers.
We'll be able to do this with very compelling unit economics on par with or more efficiently than we would be able to do in managing our own infrastructure. Finally, this strategy enables us to tap into the $ billions of R&D investments that our partners have made in various content services and other capabilities. The current wave of AI innovation is just the most recent example of how we'll be able to seamlessly integrate and deliver a variety of new technologies to our customers as they emerge. Based on the efficiencies that we've been able to deliver over the past year, we now have even more conviction in the financial and operational benefits that this strategy will yield going forward.
We feel confident that by steadily improving our financial profile, combined with our focus on prudent capital allocation, that we're well-positioned to deliver sustained long-term shareholder value. Ultimately, we think about our capital allocation strategy in terms of what will deliver the most value to our shareholders. This past year, our business generated roughly $240 million in free cash flow, which, as we mentioned previously, we expect to compound at a roughly 20% rate annually for the next three years. We plan to use this strong balance sheet and increasing free cash flow generation in part to accelerate our product roadmap via a disciplined and targeted M&A. BoxSign, as we had noted, is a great example of this, which allowed us to deliver that innovation to customers in just six months.
We view M&A as an important lever for us to rapidly advance, some key and especially some of our emerging product areas, around things like workflow, content analytics, and AI. From a balance sheet point of view, we ended this past year with $460 million in cash and short-term investments, and we had roughly $140 million of remaining buyback capacity under our prior authorization. In the year ahead, you can expect us to use the majority of our free cash flow generation to execute a robust share repurchase program. Combined with the focus on equity dilution that I mentioned earlier, we have a clear path to consistently reduce total shares outstanding over time.
Finally, while stock-based compensation is a four-year lagging indicator of our equity practices, we're committed to reducing our stock-based compensation as a percentage of revenue in the coming years as well. Putting it all together, executing against the Content Cloud strategy that we've outlined today sets the stage for us to deliver durable revenue growth and significant operating margin expansion over a multiyear period. I'll now walk through our long-term target model from top to bottom. Starting with revenue growth plus free cash flow margin, as mentioned, we expect to de-deliver a combined result of at least 45%, three to five years from now. As we outlined earlier, those rule of improvements should be fairly consistent in the coming years in constant currency.
On the top line, the strong momentum we're seeing in our underlying growth drivers and customer economics will enable us to deliver a steady state double-digit growth rate in the 10%-15% range. We will remain laser-focused on delivering profitable growth. As outlined previously, we expect to deliver leverage across all line items of the P&L, and most notably, we expect overall gross margin to be in the 80%-82% range with subscription gross margin two to three points higher. With note, you can expect that our sales and marketing expenses as a percentage of revenue, will be correlated with our revenue growth. If we're growing at the higher end of our revenue growth range that we've outlined here, you can expect sales and marketing spends to likely be at the higher end as well, and vice versa.
Finally, on the bottom line, we expect our long-term operating margin to be in the 32%-35% range. Box is well-positioned to capture a growing portion of this massive market opportunity in front of us. As we execute against this opportunity, we're committed to driving meaningful improvements in our financial profile from top to bottom. To recap what you heard from me today, last year, we demonstrated the resiliency of our business model as we delivered strong financial results despite a challenging macroeconomic environment. Our overall customer economics have been steadily improving as we move more and more customers to higher value, stickier use cases through Suites adoption.
As those customer economics continue to improve and as we continue to build out the capabilities of our Content Cloud, we're in a strong position to deliver durable revenue growth and significant margin expansion over a multiyear period. As our financial profile continues to improve while we execute a disciplined capital allocation strategy, we have a clear framework to deliver sustained shareholder value. With that, I will turn it back to Aaron for a closing commentary before we open it up for questions.
Great. Awesome. Thanks, Dylan. We're gonna get the Q&A set up, so yeah, come on up. Just wanna say I really appreciate the time this afternoon thus far. We've walked through our long-term strategy and model, and we'd love to open up for questions from anyone. Come on up. Yeah, yeah. Just getting you a water.
Hello? We'll take our first couple questions here from our live audience. As a reminder for those on the webcast, please email at ir@box.com. Thank you. If you could state your name and firm as well, please.
Great. Thanks for the question. Josh Baer from Morgan Stanley. Thanks for the presentation. Just wondering in the context of your long-term growth and margin targets, how we should think about AI embedded in your future outlook?
Sure. Yeah. It's, it's certainly, you know, I think the long-term strategy embeds a, the tremendous amount of innovation in general, that we'll be driving. You know, you saw a little bit of a preview of that from Diego's presentation. That's, you know, frankly a kind of 12-1 8 month look at the product roadmap. We obviously have a bunch of internal, you know, planning that goes farther than that. But I would say AI really gets embedded into many of the capabilities within the product.
When we talk about things like, you know, data publishing, the use case there that Diego was mentioning is the ability to collect content from a variety, places within your Box account, and then be able to make that available to teams and departments throughout your organization. Imagine a sales portal where you have assets that have been collected from anywhere, and then they get published out to a team or marketing portal or an HR portal. AI would be something that would be embedded in that capability that would serve up the exact right content that somebody was looking for, maybe an answer to a question based on the data within it. That just really makes those types of publishing features more powerful.
You can kind of go product by product and get examples of how we intend to use AI to be really embedded within the product. You know, I think because of the consumption nature of the underlying AI models, we're still working through the best ways to commercialize, the actual kinda unit volumes dynamic of the AI consumption. That's something that we're still working through, but we would expect to make sure that it is either, you know, kind of within the growth margin expectations that we've laid out, or even more, additive if we charge additional, you know, have additional pricing tiers for that functionality.
I guess also just wondering like, is AI a contribution from AI within your long-term targets?
It's so hard to kinda like specify AI's specific impact. I would say we look at our overall roadmap and the TAM that we're going after, and again, AI really becomes a differentiating capability embedded into the categories that we're going after. It helps us serve, you know, security use cases. It helps us serve content publishing use cases. It helps us differentiate against legacy ECM vendors. It's not something that we necessarily think about as we can make X amount of money because of AI directly. We still might end up charging for some components of it, but the way we really kinda think about that is still embedded within the existing product areas that we're going after.
Just to build on that, you could think about us as introducing a higher tier plan, certainly within the timeframe contemplated in our longer term model, but there's nothing explicitly dedicated in terms of the assumptions we're making around AI revenue that we're generating. Similarly, we would say the same thing for most of our products that we don't monetize separately, where it's all baked into the Suites and pricing impacts that we expect to see over time.
That's helpful. Thank you.
Great. Great. Steve Enders from Citi. Appreciate you y'all taking the questions here. I guess I just want to start on, again, how to think about the revenue outlook in particular, you know, 10%-15% growth. Yeah, as we think about kind of the go-to-market opportunity there, how do we think about, you know, kind of the expansion opportunity? How do we think about geographic opportunities to kind of build out that cadence? Overall just kind of any other, you know, productivity or rep assumptions that you're assuming in there?
Yes. Well, I can start there, is, I would say, again, steady state, we would expect to see that more historically normal kind of 50/50 contribution to our, to our growth between seats and pricing. While we do expect international contribution to our total revenue to gradually improve over time, would say that based on the market opportunity that we have available, you know, that's certainly an area of upside, as we don't want to bake in, you know, kind of a strong performance from areas that are just showing green shoots today. You know, call it kind of business as usual in terms of what's baked in there.
In terms of sales force productivity, as mentioned, we do expect to drive incremental improvements in sales force productivity over time, particularly, once we're in a more normalized macroeconomic environment.
Okay, that's helpful. Then maybe going back to, you know, the AI category and talking about that a little bit more, I guess, how do you think about, like, what gives Box the right to win within the, you know, categories you're going after for AI and how you're embedding those use cases, for customers?
Yeah. Maybe I'll provide just the high level, and then, Diego, if you wanna build on it. You know, I think when we look at AI, again, we kind of see really the kind of two big components that we think are very strategically aligned to our situation. One, AI thrives on data, and it's only useful if it has lots of data to work off of. You know, I think the sort of what we're seeing today with a lot of the innovation is this idea of you take a prompt, you know, maybe a one-sentence, you know, question. You give it to the large language model, and it spits something out.
That's largely undifferentiated because the prompt coming in is really just from the end user, so that could come from a chat interface or a search engine or whatnot. The real differentiation is when the prompt itself is existing data that an enterprise has. Again, that data is inside Box. We think we're starting out from a really strong position of strength because of how much data is inside of our platform. That means you can already prompt the AI models with an existing proprietary asset that otherwise would be very hard for that model to have access to. The second big strategic advantage is the fact that we're platform neutral. We've got great relationships with basically every single major AI provider, whether that's the hyperscalers or the new startups that are emerging.
We always take a platform-neutral approach to our innovation, so we can plug into the AI models wherever they come from. We think that gives us a very, very strong differentiating set of characteristics for our approach to AI. When you kinda layer in then the product value proposition, that's where it gets extremely exciting. Diego, I don't know if you wanna just, you know, double under[audio distortion]
I think you hit it. There's one particular point. It's not only about being able to work with everybody, but the specialization that we expect to see in the market from the providers of technology in this case, is going to make some platform be better for search-oriented AI, another platform better for another application of AI. We don't have to use only one provider. We can work with all of them, which these individual providers of technology cannot do that because they're married to themselves basically. Google would do Google, AWS would do AWS, Microsoft would do Microsoft. We can do all of them, and also the independent ones that Aaron was referring to.
On the third point that Aaron made, maybe a quick addition, because our platform keeps expanding use cases, perhaps even more rapidly than others, by applying AI to a faster growing platform, we will provide value faster than others as well. These are three major competitive advantages, plus the first one that Aaron mentioned also. Very exciting.
Thank you.
Thank you. We'll quickly take one question from our webcast, and this is from Pinjalim Bora of JP Morgan. Stephanie touched on the possibility of introducing new higher-priced plans. Help us understand how such pricing and packaging encompasses.
Yeah. I don't know if you want me to go through the full price and packaging philosophy and then when we would maybe introduce another plan. Hopefully that hits the question.
For sure. As I mentioned, we really do look at sort of three primary vectors. We have a pricing and packaging team that looks at this very closely. One, the product innovation, so whether or not there's enough differentiation and value realized where we know that the customers are saying, "We really want this," and we think that it'll realize more value for them much more quickly if we integrate it as part of the package. What we're trying to do is ensure they leverage the entire platform. We look very closely at the innovation, so that's a lot of the work that Diego and the team are leading. We then look at whether or not, we've capped out at all.
As you saw from Mark's slides, we've still got tremendous upside and opportunity to take many of our install-based customers to Enterprise Plus, and that's something that we work on day in, day out across all of our geographies. Whenever that time comes, when we think there's an opportunity for us to again upgrade to the next plan, we look at that very closely. The third element is really just customer demand. We did see this obviously with Sign. There was a real desire with a number of the products that we added into the new plan that customers wanted to realize value very, very quickly. They were prepared to pay for it. It was a differentiator for them. It's going to allow them to save money elsewhere.
We look very much and take customer feedback into consideration through our advisory boards and a number of other avenues.
Yeah. Just on the first component that Steph said around differentiation, I think I'd, you know, I'd point to as we go deeper in areas like workflow, that starts to fragment out into kind of subcategories that we'll be able to innovate on, Manoj's, you know, sort of high level, you know, view of where we're taking security and compliance, data governance. There's sub-markets within there that have some very advanced features that we're excited about.
As we continue to go, you know, deep in our three core pillars, you'll see areas where we can either take an existing feature set and add, you know, sort of additional value in an existing product that we think makes sense to charge for, or there'll be net new product categories that we'll expand into that will sort of drive the creation of future plans.
Erik Suppiger here with JMP. A few things. First off, just on the stock comp, I'm curious if there's a target % that you would expect that to come down to as a percentage of revenue. Then on the AI, can you just clarify what aspect of that is organic? Are you using the algorithms from the hyperscalers, then your value is that it's retained within your cloud? Or how much of the software there is actually developed by Box? What do you do if content is on-premise at the customer? Is that still something that you can apply your AI to?
Stock-based comp question. We don't have a specific, you know, number out there for the longer term target, largely because there are some components that drive stock-based compensation that we don't directly control. Really our philosophy and approach is we are laser-focused on managing both equity dilution. That's what we, you know, discuss and really focus on and are held accountable to by ourselves, our board, our compensation committee. As we've talked about and as you've seen, also very focused on returning capital to shareholders through our share repurchase program. That's really, you know, the thing that we're most near term focused on.
Certainly, the natural result of those two things, or I guess in particular, the equity dilution issuances combined with everything we're doing to scale and build out the company in lower cost locations, is what gives us the confidence that we'll be able to bring that down consistently over time. It's just harder to put a specific number on that because of some of the other factors that go into it.
On the AI front, the way to think about it is there's sort of model developers. Sometimes there's new startups, sometimes larger startups like OpenAI. Oftentimes those models are running within the hyperscalers themselves. You know, everybody is familiar with the Microsoft OpenAI partnership, as well as the development of models from the hyperscalers themselves. You're seeing that today with Google's announcements. Basically, they all produce APIs, where you're able to kinda interact with those models via, you know, typical kind of cloud service APIs. We build an abstraction layer that connects up to those various APIs. The power of our platform is that we have security, governance, lifecycle management, data permissions that then can hook into that abstraction layer.
The really, really hard software that you have to build or work with as an enterprise is actually, how do you manage the data? How do you orchestrate the flow of that information? How do you make sure it gets sent back and forth, you know, to an AI provider? How do you enable the exact right permission level of who has access to what? That's all the value that has to get built out, and that's what our Content Cloud delivers. Plugging into the AI models themselves is that abstraction layer where we will also add a tremendous amount of value.
In terms of the on-premises environments, we won't plug into, to a customer's on-premises environment other than to migrate the data that they might have in a, in a legacy network file share and then move that into Box, so they can get... take advantage of this AI. I'd actually say AI becomes another catalyst where customers are gonna have to really rethink that on-prem model of data management. If you go back, just one more small kind of academic point on this topic, if you kinda go back to that fragmented ecosystem of data, you imagine a customer has network file shares or an on-prem document management system as well as cloud tools that maybe are fragmented.
That's an architecture that is nearly impossible to effectively bring AI to because the data would be so distributed across too many different systems, all with likely competing permission models. You'd never be able to have an AI model that would train against all of that because you'd be having data leakage in your AI model at all times. That would become a huge privacy issue for any enterprise if they were working off of this fragmented set of content tools. We think that's another reason why companies will move their data into Box and ultimately leverage a modern Content Cloud for that use case.
Hi, thank you for this. A lot of good content here. Thomas Blakey from KeyBank. The first question is for Dylan. You've mentioned confidence in the increasing those longer term targets, looking out to 45% Rule of in the long term target. You also mentioned, I think, like, the confidence was based on maybe different growth outlooks. Could you maybe talk to us about, like, any type of stress testing you could do? How low could growth go type of thing relative to hitting those targets? My first question.
Yeah. I would say, you know, certainly, very confident in delivering against that combined outcome. You know, that's why we gave the range in terms of the revenue growth expectations. I would say that we look at the levers in the model and especially where we'd be allocating, you know, a lot of the dollars going forward, we do have the ability and would certainly, you know, deliver against the commitments if, for example, our revenue growth fell outside of that range. At the same time, especially if you're looking at, you know, three to five years out, steady-state basis, factoring all the different tailwinds that we're seeing in the business and the longer term opportunity, we feel confident in the top line drivers as well, or the top line outcomes as well.
That's helpful, Dylan. Thank you. My second question is just on security, maybe Manoj or Aaron. Just seems like there's a huge opportunity here, sitting on top of content and data, which every security company on the planet is trying to protect. You're right in front of that. Just maybe talk about it. I know you sell a suite product, so it's hard to. You know, we heard from Warner, and they're not using a lot of products that they have access to. What kind of penetration rate are you seeing right now of security? If you could even maybe, Manoj, who are you initially consolidating spend around in security? That'd be helpful. Thank you.
Yeah, maybe I'll characterize the customer base and then have Manoj talk about some of the roadmap and strategy. Security is definitely one of our most adopted capabilities, both within the suite and the product portfolio in general. You know, when we survey customers of the number one reason why they purchase Box, of course, you know, it's sort of the combination of our capabilities, you know, lead to a deal, but the probably single biggest driver is that security differentiation. You know, every customer is on a different point in the journey. You heard from Warner today, starting to add things like advanced data classification capabilities.
You know, kind of everyone is in that continuum of, you know, whether it's threat detection or ransomware detection or data classification, we're driving, you know, greater adoption of all those features. I think what we're most excited about is just frankly, the surface area of what is still left to go impact from a security standpoint. I think for far too long, the security vendor ecosystem has been sort of somewhat divorced from the application ecosystem. In a lot of application categories, that's fine. For something like content, where fundamentally content moves around, it gets accessed by different people, you really don't have the ability to sort of separate security from the content provider to...
if you truly wanna have a, you know, a real robust way of protecting your content. That's what we get excited about in this space. Manoj, I don't know if you wanna kinda touch on some of that, where that goes next.
As I've mentioned, our sort of philosophy around security is, you know, built on security onto the content. That's really where our focus is. When you think about sort of the security ecosystem, a lot of the vendors are focused on a bunch of other steps of the kill chain, security kill chain, so to speak, right? We squarely focus on the content front. As long as sort of, you know, the content continues to grow, sort of our opportunity to sort of deliver outcomes around content continue to grow, right? From the spend point of view, our, you know, we, we will look to gain more and more share of the security spend per se, and that's as we all know, that's one of the areas which is actually continues to grow even in today's environment.
Great. I'm gonna take another question from an investor. That is regarding Salesforce headcount additions. You talked about meeting your goal of the 15% in fiscal 2023. When do you expect those folks to be fully productive? Then the more metered 5% projection for 2024, how should we think about your capacity when the demand trends normalize?
Yeah. Maybe Dylan can go ahead and Mark can go on.
Sure. I can maybe hit some of the numbers and then Mark talk through the approach and things like that. We expect that 15% of growth in the Salesforce to become fully ramped throughout the course of this year. As a reminder, we tend to see reps become fully productive and ramped in roughly six months in our commercial business, for like 9 to 12 months in our enterprise segment. I would say that it does have a lagging impact in terms of when that capacity is fully ramped by roughly a year or so.
At the same time, I would also add that steady state, we do expect our sales force growth to be slightly lower than our overall revenue growth, as it's gonna be pretty closely correlated, we would expect. As mentioned, we do expect to be able to drive some incremental improvements in our sales force productivity over time.
Mark, maybe you wanna just give some of the other dynamics that we're seeing in the Salesforce.
Yeah. I think the other piece of color is, you know, entering this fiscal year, we have likely the healthiest number of ramped heads that we've ever had at the start of a fiscal year. It's a combination of good hiring last year, and then all those reps starting to come off of ramp, but then importantly, much less attrition in the Salesforce than we've seen before, for the obvious reason that software companies aren't hiring like they were before, so it's not as competitive of an environment. We're a great place for world-class sellers to work, and so we're having much better retention numbers. Combination of strong hiring last year plus strong retention is giving us, I think, the firepower that we need for the years ahead, and I feel very good about our AE headcount numbers right now.
Hi, this is Richard Poland from RBC. Thanks for taking my question. During the customer conversation earlier, I believe the customer mentioned that he had access to Box Sign, but he wasn't necessarily using it just yet, and he was using a third-party solution. In the enterprise, what are some of the key features that you still need to add there, if there are any, just to kind of unlock more of that consolidation opportunity on the sign side?
Sure. Yeah. Maybe I'll hit on just the customer journey, and then Diego, if you wanna talk about some of the science-specific roadmap. As you can imagine, you know, every customer is at a different, you know, point in that journey and, you know, that, you know, lots of different permutations of somebody using, you know, Shield more, somebody using Sign more, somebody using Relay more. We think that's actually the, you know, great value add of the Suites approach is if you think about it previously, our sales reps then had to go and sell each one of those capabilities in a different way because each customer might be somewhere at a different point in that journey. It was very inefficient.
The current model allows customers to sort of buy into the platform and then adopt as they see those use cases emerge. We think that that conversation is representative, but a different customer might again be somewhere different on that continuum of adoption of a specific set of features. Yeah, go for it.
Cause Tom mentioned this as well. It's a great question, and quite frankly, plays to our seed expansion and our prosper seed story because in this instance, Warner, their primary use case, if you think of the use cases where you start with the land ones, where around security and external collaboration, they are a very big user, Box Governance and Box Shield. They, the planning required with these enterprises, as you work through the use cases, requires time on their side and some people as well. We've been working on a relay use case ready to go now, which is awesome. Able to run two in parallel, so they're doing their Shield deployment with the support of ourselves and a partner and Relay. There'll be sort of three going.
They are starting to think about with Sign, we've started to have a conversation about some options, different lines of business. All of a sudden, this plays to the stickiness story, which we love so much. You get the Suites allow us to identify this breadth of use cases. You work your way across the organization, you get more users on board, you go all in, and then you go deeper with each of the cases. It's sort of this, it is a journey, and Mark and I talk about it all the time. Even the three slides that I showed up front with those customers, they actually required a period of time to deploy on each of these features, let's say.
Sometimes you can do it in parallel, depending on the organization and their what they're able to do from a bandwidth perspective. Sometimes we plan for it. Like, there's literally key milestones that say, "We're gonna start with security. We're then gonna go to a Sign interface immediately. In parallel, we may do..." In the case of John, he was doing very quickly was able to do his ServiceNow integration, and he said to me, "We're gonna do Teams. We're ready to go." That's a different group of folks in his organization. What you're trying to do is work across the organization to determine how quickly they can actually take advantage of things and then seamlessly integrate. Mark, would you add anything else?
I think that so the question is about what features do we have to build, and Diego can comment on that. The bigger oftentimes the bigger friction point or that the existing e-sign vendor is really deeply ingrained into a number of workflows, and sometimes organizations just don't have the bandwidth to make the shift, and they're just like, "Oh, we'll do it later." What they do wanna do is they don't wanna pay per envelope or per signature charges for an enormous number of e-sign use cases that they've been unwilling to put on with their existing e-sign vendors. Think of employee onboarding and off-boarding type of use cases and all the things that many of us in our workplaces are not putting on e-sign yet. The reason why is they don't wanna pay for it.
Even an enterprise where there is an incumbent e-sign vendor, we're having a lot of success lighting up that long tail of new e-sign use cases, and then we become an e-sign vendor in that environment. It's just a matter of time before we topple it. That's a very common motion that we're seeing.
Got it. Thank you. That's very helpful. Just kind of a follow-up on the potential for further Suites adoption in the Japan business. Japan does tend to have some unique buying behaviors, and I know the adoption of the Core and Shield has been doing pretty well there. Just kinda what steps are you taking to drive the adoption in some of the rest of the portfolio on just kinda the Suites side or maybe just the add-on side in general?
Yeah. The, the journey, and the reason for the uniqueness in Japan is, you know, it's such a strong partner environment. A lot of the work that we do is through partners, but with a direct team as well, in conjunction with that. There can be a little bit of a ramp lag with a new go-to-market motion, and that's ultimately I think what we had seen previously in Japan. With the bolstered product roadmap and the increased focus of Suites just across the global sales force, I think that's led to a pretty meaningful change, and you saw that in the chart. Steph, if you wanna talk about any of the programs we're doing with our Japan channel partners.
Yeah. We enable the entire partner community. We have over 400 partners. We have probably the most sizable partner community, bar one, in the whole country. It was a pretty extensive effort, and they are all on board, which is why you saw the growth numbers last year pretty remarkably so. A lot of it was just bringing them up to speed from an awareness and education perspective. The Japanese model is once they're all on board, they go, and we love that about them. It's a bit of a machine. We just continue to focus on that. Aaron and Thierry visit, and we try and get there as often as we can to provide more support. They have a really, really good team on the ground.
They've built a very sort of high resource, very skilled organization that works with the partners. I think we're just going to continue to see great growth. Mark, would you add anything?
No, I think you covered it.
Thank you.
Great. We have time for one more question from the audience.
George Iwanyc with Oppenheimer. Thanks for squeezing me in here. Mark, maybe just digging in with the current unsettled environment, can you give us a sense of the tone of customer conversations right now?
Yeah. I mean, to my earlier comments, I think that the message around improving your security posture, cutting costs and complexity, and delighting your end users is playing very, very well. It certainly is a different environment than it was in the first half of last year. So around the summertime, you start to see a little more scrutiny on some deals where there's a little more budget scrutiny. I think just simply put, as we enter months and quarters, we need more pipeline in this environment than we did before. The message very much resonates, and it resonates in all segments, in all geographies, all around the world.
Some deals just get a little more scrutiny, so we need more deals going into a month and into a quarter than we did before to make up for that, because, yeah. That's really the way I would state it. I hope it answers the question. It's certainly a tighter budget environment than we saw before, but one where I think our message really stands out.
All right. Aaron, maybe double-clicking on the M&A commentary. You know, Should we still look at this as tuck-ins, or would you consider maybe something bigger, especially with, you know, the opportunity with AI?
Yeah. I would say we're still very focused in kind of the typical pattern that you've seen. You know, you know, depending on the size that you kind of have a threshold at, you know, we kinda consider it more tuck-in oriented. You know, very strong team, you know, clear technology fit, and something that is very capital efficient. That's our, you know, historical approach for M&A. I think that'll continue to be the case. AI actually probably doesn't really change that because so many, so many of the products in the market are actually... Like, if you built something in AI, you know, before even two years ago, it's probably not leveraging a lot of the latest breakthroughs in AI.
We don't think that kinda changes the size or makeup of deals. We're really judicious on the kinds of things that we bring on because the sanctity of the platform is so important. You know, we are more attracted to products and technology that we can fit into the platform very quickly and then make it available to our customers. Right now, you know, for instance, a lot of the AI effort is actually organic, in-house, as an example.
Thank you.
Yeah, thanks. Awesome. Well, appreciate all the great questions. We're obviously, you know, here, you know, for more questions for anybody that reaches out, and really appreciate the time today. In walking through our long-term model, we're obviously incredibly passionate and excited about the opportunity ahead, so looking forward to spending more time with you all. Great.