BOX INC

Previous wording

Box is the Intelligent Content Cloud: a secure and intelligent content management (ICM) platform. Box gives organizations a single platform for their unstructured data – which typically represents about 90% of all data within an organization. This data is content – from blueprints to wireframes, videos to documents, proprietary formats to PDFs – and it is the source of an organization’s unique value. The Box Intelligent Content Cloud enables our customers to securely manage the entire content lifecycle, from the moment a file is created or ingested to when it is shared, edited, published, approved, signed, classified, and retained. Box keeps content secure and compliant, while also allowing easy access and sharing of this content from anywhere, on any device – both within the organization and with external partners.

Current wording

Box is the leading Intelligent Content Management (ICM) provider. Box gives organizations a single platform for their unstructured data – which typically represents about 90% of all data within an organization. This data is content – from blueprints to wireframes, videos to documents, proprietary formats to PDFs – and it is the source of an organization’s unique value. The Box ICM platform enables our customers to securely manage the entire content lifecycle, from the moment a file is created or ingested to when it is shared, edited, published, approved, signed, classified, and retained. Box keeps content secure and compliant, while also allowing easy access and sharing of this content from anywhere, on any device – both within the organization and with external partners.

Previous wording

In addition, we continue to innovate by expanding our core services and offerings. We recently announced the public beta of Box Hubs to surface curated content quickly and securely through intelligent portals. Box Hubs is available with Box AI, a new set of capabilities that natively integrates advanced artificial intelligence (AI) models into Box's ICM platform. Using Box AI for Hubs, customers can easily find answers to critical questions across multiple documents in Box and generate new content. In addition, Box AI for Documents, which allows users to ask questions about any document they are viewing to quickly uncover key findings, and Box AI for Notes, which enables users to generate content or refine drafted material, are both now generally available. In addition, the Box AI application programming interfaces (APIs) for text generation and document Q&A are available via public beta so customers can extend Box AI capabilities to their custom applications.

Current wording

In addition, we continue to innovate by expanding our core services and offerings. In September 2024, we announced the general availability of Box Hubs, an offering that provides simple, customizable portals for individuals and teams to curate and publish content across their enterprise. Box Hubs is available with Box AI, a new set of capabilities that natively integrates advanced artificial intelligence (AI) models into Box's ICM platform. Using Box AI for Hubs, customers can easily find answers to critical questions across multiple documents in Box and generate new content. We also offer Box AI for Documents, which allows users to ask questions about any document to quickly uncover key findings, and Box AI for Notes, which enables users to generate content or refine drafted material. In addition, we announced the general availability of the Box AI application programming interface (API), which enables developers to integrate Box AI capabilities into custom applications. We provide our customers flexibility to power unique use cases by enabling them to select models from our trusted large language model partners, configure custom AI agents, and refine default prompts for tailored responses.

Previous wording

In addition, with Box Consulting, organizations can access professional services for critical topics like implementation, technology and application development, and change management and user training. The increasing traction of these product innovations allows our customers to realize the full set of capabilities of the Intelligent Content Cloud.

Current wording

In addition, with Box Consulting, organizations can access professional services for critical topics like implementation, technology and application development, and change management and user training. The increasing traction of these product innovations allows our customers to realize the full set of capabilities of ICM.

Previous wording

For the three months ended July 31, 2024 and 2023, our revenue was $270.0 million and $261.4 million, respectively, representing year-over-year growth of 3%, or 6% growth on a constant currency basis. As of July 31, 2024, our remaining performance obligations were $1.272 billion, representing a 12% increase from our remaining performance obligations of $1.138 billion as of July 31, 2023, or 14% growth on a constant currency basis. For the three months ended July 31, 2024, our gross profit was $214.5 million and our gross margin was 79.4%, compared to our gross profit of $194.4 million and our gross margin of 74.4% for the three months ended July 31, 2023. For the three months ended July 31, 2024, our operating income was $20.3 million and our operating margin was 7.5%, compared to our operating income of $9.9 million and our operating margin of 3.8% for the three months ended July 31, 2023. For the three months ended July 31, 2024, our net cash provided by operating activities was $36.3 million, an increase of 11% from our net cash provided by operating activities of $32.7 million for the three months ended July 31, 2023. For the three months ended July 31, 2024, our non-GAAP free cash flow was $32.7 million, an increase of 59% from our non-GAAP free cash flow of $20.6 million for the three months ended July 31, 2023.

Current wording

For the three months ended October 31, 2024 and 2023, our revenue was $275.9 million and $261.5 million, respectively, representing year-over-year growth of 5%, or 6% growth on a constant currency basis. As of October 31, 2024, our remaining performance obligations were $1.282 billion, representing a 13% increase from our remaining performance obligations of $1.131 billion as of October 31, 2023, or 14% growth on a constant currency basis. For the three months ended October 31, 2024, our gross profit was $220.4 million and our gross margin was 79.9%, compared to our gross profit of $192.3 million and our gross margin of 73.5% for the three months ended October 31, 2023. For the three months ended October 31, 2024, our operating income was $23.4 million and our operating margin was 8.5%, compared to our operating income of $11.4 million and our operating margin of 4.4% for the three months ended October 31, 2023. For the three months ended October 31, 2024, our net cash provided by operating activities was $62.6 million, a decrease of 13% from our net cash provided by operating activities of $71.8 million for the three months ended October 31, 2023. For the three months ended October 31, 2024, our non-GAAP free cash flow was $57.4 million, a decrease of 2% from our non-GAAP free cash flow of $58.3 million for the three months ended October 31, 2023.

Previous wording

Our overall performance depends in part on worldwide economic and geopolitical conditions and their impact on customer behavior. Worsening economic conditions, including impacts from inflation, higher interest rates, slower growth, the stronger dollar versus foreign currencies, particularly the Japanese Yen, the ongoing Hamas-Israel and Russia-Ukraine conflicts and other changes in economic conditions, may adversely affect our results of operations and financial performance. During the three months ended July 31, 2024, in addition to headwinds from foreign exchange rate trends, we continued to see an impact from additional customer scrutiny being placed on larger deals and lower seat expansion rates due to the challenging macroeconomic environment. As a result, we have experienced, and may continue to experience, increased customer churn and delayed sales cycles, as well as customers and prospective customers reducing budgets related to services that we offer. While we believe IT budgets have tightened and some larger deals have required more scrutiny across verticals and geographies, we also believe we are well-positioned to execute through these dynamic times as Box's ICM platform enables enterprises to streamline their businesses, drive up productivity, reduce risk, and lower costs.

Current wording

Our overall performance depends in part on worldwide economic and geopolitical conditions and their impact on customer behavior. Economic conditions, including impacts from inflation, higher interest rates, slower growth, the stronger dollar versus foreign currencies, particularly the Japanese Yen, the ongoing Russia-Ukraine conflict and the ongoing conflict in the Middle East and other changes in economic conditions, may adversely affect our results of operations and financial performance. During the three months ended October 31, 2024, in addition to headwinds from foreign exchange rate trends, we continued to see an impact from additional customer scrutiny being placed on larger deals and lower seat expansion rates due to the challenging macroeconomic environment. As a result, we have experienced, and may continue to experience, increased customer churn and delayed sales cycles, as well as customers and prospective customers reducing budgets for services that we offer. While we believe IT budgets have tightened and some larger deals have required more scrutiny across verticals and geographies, we also believe we are well-positioned to execute through these dynamic times as Box's ICM platform enables enterprises to streamline their businesses, drive up productivity, reduce risk, and lower costs.

Previous wording

RPO as of July 31, 2024 was $1.272 billion, an increase of 12% from July 31, 2023. The increase in RPO was primarily driven by expansion within existing customers as they broadened their deployment of our product offerings and the conversion to multi-product Suites. The increase in RPO was also driven by the addition of new customers and the timing of customer-driven renewals. RPO growth was partially offset by a negative impact of 230 basis points from foreign currency exchange rates.

Current wording

RPO as of October 31, 2024 was $1.282 billion, an increase of 13% from October 31, 2023. The increase in RPO was primarily driven by expansion within existing customers as they broadened their deployment of our product offerings and the conversion to multi-product Suites. The increase in RPO was also driven by the addition of new customers and the timing of customer-driven renewals. RPO growth was partially offset by a negative impact of 30 basis points from foreign currency exchange rates.

Previous wording

Billings for the three and six months ended July 31, 2024 were $256.4 million and $446.9 million, respectively, representing an increase of 10% for the three months ended July 31, 2024 and an increase of 5% for the six months ended July 31, 2024. The increase in billings was primarily driven by expansion within existing customers as they broadened their deployment of our product offerings and the conversion to multi-product Suites, the addition of new customers, and the timing of customer-driven renewals. Billings growth for the three and six months ended July 31, 2024 was favorably impacted by 100 basis points and unfavorably impacted by 200 basis points, respectively, from foreign currency exchange rates.

Current wording

Billings for the three and nine months ended October 31, 2024 were $264.7 million and $711.6 million, respectively, representing an increase of 4% for the three months ended October 31, 2024 and an increase of 5% for the nine months ended October 31, 2024. The increase in billings was primarily driven by expansion within existing customers as they broadened their deployment of our product offerings and the conversion to multi-product Suites, the addition of new customers, and the timing of customer-driven renewals. Billings growth for the three and nine months ended October 31, 2024 was favorably impacted by 110 basis points and unfavorably impacted by 80 basis points, respectively, from foreign currency exchange rates.

Previous wording

Non-GAAP free cash flow for the three and six months ended July 31, 2024 was $32.7 million and $156.0 million, respectively, representing an increase of 59% and 21% from the three and six months ended July 31, 2023, respectively. The increase in non-GAAP free cash flow in both periods was primarily driven by the reduction in payments of finance lease liabilities due to our migration to the public cloud from our collocated data centers. The increase was also driven by the increase in cash flows from operating activities, which is described in more detail under Liquidity and Capital Resources below.

Current wording

Non-GAAP free cash flow for the three and nine months ended October 31, 2024 was $57.4 million and $213.3 million, respectively, representing a decrease of 2% and an increase of 14% from the three and nine months ended October 31, 2023, respectively. The decrease in non-GAAP free cash flow for the three months ended October 31, 2024 was primarily driven by the decrease in cash flows from operating activities, which is described in more detail under Liquidity and Capital Resources below. The decrease was partially offset by the reduction in payments of financial lease liabilities due to our migration to the public cloud from our collocated data centers. The increase in non-GAAP free cash flow for the nine months ended October 31, 2024 was primarily driven by the reduction in payments of finance lease liabilities due to our public cloud migration.

Previous wording

Our net retention rate was 102% and 103% as of July 31, 2024 and 2023, respectively. The decline in our net retention rate as of July 31, 2024 was primarily attributable to heightened budget scrutiny putting pressure on seat expansion within existing customers and increased partial customer churn. As our customers purchase add-on products or our bundled Enterprise Plus plan, we tend to realize significantly higher average contract values and stronger net retention rates as compared to customers who only purchase our core product. We believe our go-to-market efforts to deliver a solution selling strategy and our investments in product, customer success, and Box Consulting, including our Box Shuttle migration offering, are significant factors in our customer retention results. As we penetrate customer accounts, we expect our net retention rate to remain above 100% for the foreseeable future.

Current wording

Our net retention rate was 102% as of October 31, 2024 and 2023. Our net retention rate as of October 31, 2024 was primarily attributable to heightened budget scrutiny putting pressure on seat expansion within existing customers and increased partial customer churn. As our customers purchase add-on products or our bundled Enterprise Plus plan, we tend to realize significantly higher average contract values and stronger net retention rates as compared to customers who only purchase our core product. We believe our go-to-market efforts to deliver a solution selling strategy and our investments in product, customer success, and Box Consulting, including our Box Shuttle migration offering, are significant factors in our customer retention results. As we penetrate customer accounts, we expect our net retention rate to remain above 100% for the foreseeable future.

Previous wording

Interest and other income, net consists of interest income, interest expense, gains and losses from foreign currency transactions, and other income and expense. Interest income consists primarily of interest earned on our cash and cash equivalents and short-term investments. Interest expense consists primarily of interest charges for our line of credit and interest rate swap agreement, interest expense related to finance leases, and the amortization of issuance costs of our convertible senior notes. We have historically invested our cash and cash equivalents in overnight deposits, certificates of deposit, money market funds, U.S. treasury securities and non-U.S. government issued securities.

Current wording

Interest and other (expense) income, net consists of interest expense, interest income, gains and losses from foreign currency transactions, and other income and expense. Interest expense consists primarily of interest charges for our line of credit and convertible senior notes, interest expense related to finance leases, and the amortization of issuance costs of our convertible senior notes. Interest income consists primarily of interest earned on our cash and cash equivalents and short-term investments. Other expense consists primarily of induced conversion expense related to our 2026 Convertible Notes. We have historically invested our cash and cash equivalents in overnight deposits, certificates of deposit, money market funds, U.S. treasury securities and non-U.S. government issued securities.

Previous wording

Comparison of the Three and Six Months Ended July 31, 2024 and 2023

Current wording

Comparison of the Three and Nine Months Ended October 31, 2024 and 2023

Previous wording

The $8.6 million, or 3%, increase in revenue for the three months ended July 31, 2024 was primarily driven by seat growth in existing customers, continued strong attach rates of our multi-product Suites offerings, particularly Enterprise Plus, and strong growth in Japan. For the three months ended July 31, 2024, our Suites attach rate was 87% in deals over $100,000, an increase from 78% for the three months ended July 31, 2023. The increase was partially offset by the weakening of foreign currency exchange rates, which negatively impacted our revenue growth rate by 310 basis points, and customers partially churning their deployment with Box.

Current wording

The $14.4 million, or 5%, increase in revenue for the three months ended October 31, 2024 was primarily driven by seat growth in existing customers, continued strong attach rates of our multi-product Suites offerings, particularly Enterprise Plus, and strong growth in Japan. For the three months ended October 31, 2024, our Suites attach rate was 83% in deals over $100,000, an increase from 79% for the three months ended October 31, 2023. The increase was partially offset by the weakening of foreign currency exchange rates, which negatively impacted our revenue growth rate by 100 basis points, and customers partially churning their deployment with Box.

Previous wording

The $21.4 million, or 4%, increase in revenue for the six months ended July 31, 2024 was primarily driven by seat growth in existing customers, continued strong attach rates of our multi-product Suites offerings, particularly Enterprise Plus, and strong growth in Japan. The increase was partially offset by the weakening of foreign currency exchange rates, which negatively impacted our revenue growth rate by 290 basis points, and customers partially churning their deployment with Box.

Current wording

The $35.7 million, or 5%, increase in revenue for the nine months ended October 31, 2024 was primarily driven by seat growth in existing customers, continued strong attach rates of our multi-product Suites offerings, particularly Enterprise Plus, and strong growth in Japan. For the nine months ended October 31, 2024, our Suites attach rate was 85% in deals over $100,000, an increase from 76% for the nine months ended October 31, 2023. The increase was partially offset by the weakening of foreign currency exchange rates, which negatively impacted our revenue growth rate by 220 basis points, and customers partially churning their deployment with Box.

Previous wording

The $14.9 million, or 12%, decrease in cost of revenue for the six months ended July 31, 2024 was primarily due to decreases of $13.0 million in depreciation expense and $7.7 million in bandwidth and data center related expense due to the completion of our migration to the public cloud from our collocated data centers. Additionally, there was a decrease of $3.1 million in employee related costs driven by a 5% decrease in headcount, an increase of $2.5 million in gains related to the sale of data center assets, and a decrease of $1.3 million in amortization expense associated with acquired technology and capitalized internally developed software. This decrease was partially offset by an increase of $13.1 million in public cloud infrastructure costs, driven by our migration to the public cloud from our collocated data centers. Cost of revenue as a percentage of revenue decreased 400 basis points year-over-year.

Current wording

The $13.7 million, or 20%, decrease in cost of revenue for the three months ended October 31, 2024 was primarily due to decreases of $9.1 million in depreciation expense and $5.7 million in bandwidth and data center related expense due to the completion of our migration to the public cloud from our collocated data centers. Additionally, there was an increase of $2.3 million in gains related to the sale of data center assets and a decrease of $0.9 million in workforce reorganization costs, which were incurred during the three months ended October 31, 2023. This decrease was partially offset by an increase of $5.1 million in public cloud infrastructure costs driven by our migration to the public cloud from our collocated data centers. Cost of revenue as a percentage of revenue decreased 640 basis points year-over-year.

Previous wording

The $11.5 million, or 17%, decrease in cost of revenue for the three months ended July 31, 2024 was primarily due to decreases of $6.0 million in bandwidth and data center related expense and $6.0 million in depreciation expense due to the completion of our migration to the public cloud from our collocated data centers. Additionally, there was an increase of $2.6 million in gains related to the sale of data center assets and a decrease of $1.7 million in employee related costs driven by a 5% decrease in headcount. This decrease was partially offset by an increase of $5.2 million in public cloud infrastructure costs, driven by our migration to the public cloud from our collocated data centers. Cost of revenue as a percentage of revenue decreased 500 basis points year-over-year.

Current wording

The $28.6 million, or 14%, decrease in cost of revenue for the nine months ended October 31, 2024 was primarily due to decreases of $22.1 million in depreciation expense and $14.6 million in bandwidth and data center related expense due to the completion of our migration to the public cloud from our collocated data centers. Additionally, there was an increase of $4.8 million in gains related to the sale of data center assets and decreases of $2.0 million and $1.5 million in employee related costs and stock-based compensation expense, respectively, driven by a 5% decrease in an annual average headcount. This decrease was partially offset by an increase of $18.2 million in public cloud infrastructure costs, driven by our migration to the public cloud from our collocated data centers. Cost of revenue as a percentage of revenue decreased 460 basis points year-over-year.

Previous wording

The $2.3 million, or 2%, increase for the six months ended July 31, 2024 was primarily due to increases of $3.8 million and $3.1 million in employee related costs and stock-based compensation expense, respectively, driven by a 12% increase in headcount. The increased employee headcount and related costs are driven by the growth in lower cost regions. This increase was partially offset by an increase of $4.7 million in capitalized internally developed software costs. Research and development expenses as a percentage of revenue decreased 100 basis points year-over-year.

Current wording

The $6.8 million, or 11%, increase for the three months ended October 31, 2024 was primarily due to increases of $6.3 million and $3.3 million in employee related costs and stock-based compensation expense, respectively, driven by a 20% increase in headcount. The increased employee headcount and related costs are driven by the growth in lower cost regions. This increase was partially offset by an increase of $3.6 million in capitalized internally developed software costs. Research and development expenses as a percentage of revenue increased 200 basis points year-over-year.

Previous wording

The $2.1 million, or 3%, increase for the three months ended July 31, 2024 was primarily due to increases of $2.8 million and $1.7 million in employee related costs and stock-based compensation expense, respectively, driven by a 12% increase in headcount. The increased employee headcount and related costs are driven by the growth in lower cost regions. This increase was partially offset by an increase of $2.4 million in capitalized internally developed software costs. Research and development expenses as a percentage of revenue remained flat year-over-year.

Current wording

The $9.1 million, or 5%, increase for the nine months ended October 31, 2024 was primarily due to increases of $10.9 million and $6.5 million in employee related costs and stock-based compensation expense, respectively, driven by a 20% increase in headcount. The increased employee headcount and related costs are driven by the growth in lower cost regions. This increase was partially offset by an increase of $8.3 million in capitalized internally developed software costs. Research and development expenses as a percentage of revenue remained flat year-over-year.

Previous wording

The $13.1 million, or 7%, increase for the six months ended July 31, 2024 was primarily due to an increase of $5.1 million in marketing expenses, driven by increased costs related to marketing events. Additionally, there were increases of $4.0 million and $2.2 million in stock-based compensation expense and employee related costs, respectively, driven by a 4% increase in headcount, and $1.1 million in office related costs. Sales and marketing expenses as a percentage of revenue increased 100 basis points year-over-year.

Current wording

The $7.5 million, or 9%, increase for the three months ended October 31, 2024 was primarily due to an increases of $4.0 million and $2.9 million in employee related costs and stock-based compensation expense, respectively, driven by a 5% increase in headcount. Additionally, there was an increase of $0.9 million in marketing expenses, partially offset by a decrease of $0.7 million in commission expenses. Sales and marketing expenses as a percentage of revenue increased 100 basis points year-over-year.

Previous wording

The $6.6 million, or 7%, increase for the three months ended July 31, 2024 was primarily due to an increase of $2.8 million in marketing expenses, driven by increased costs related to marketing events. Additionally, there were increases of $1.6 million and $1.5 million in stock-based compensation expense and employee related costs, respectively, driven by a 4% increase in headcount, and $0.4 million in consulting services costs. Sales and marketing expenses as a percentage of revenue increased 100 basis points year-over-year.

Current wording

The $20.6 million, or 8%, increase for the nine months ended October 31, 2024 was primarily due to an increase of $8.7 million and $7.1 million in employee related costs and stock-based compensation expense, respectively, driven by a 5% increase in headcount, Additionally, there were increases of $6.0 million in marketing expenses, driven by increased costs related to marketing events, partially offset by decrease of $1.3 million in commission expenses. Sales and marketing expenses as a percentage of revenue increased 100 basis points year-over-year.

Previous wording

The $0.9 million, or 3%, increase for the three months ended July 31, 2024 was primarily due to an increase of $1.2 million in employee related costs, driven by a 6% increase in headcount, partially offset by an increase of $0.4 million in capitalized software costs. General and administrative expense as a percentage of revenue remained flat year-over-year.

Current wording

The $1.7 million, or 5%, increase for the three months ended October 31, 2024 was primarily due to an increase of $2.3 million in employee related costs driven by an 8% increase in headcount, and an increase of $0.6 million in outside agency and consulting services costs, partially offset by a decrease of $1.3 million in subscription software contract expense. General and administrative expense as a percentage of revenue remained flat year-over-year.

Previous wording

The $0.8 million, or 1%, increase for the six months ended July 31, 2024 was primarily due to an increase of $2.0 million in employee related costs, driven by a 6% increase in headcount, partially offset by a decrease of $1.2 million in subscription software contract expense. General and administrative expense as a percentage of revenue decreased 100 basis points year-over-year.

Current wording

The $2.5 million, or 3%, increase for the nine months ended October 31, 2024 was primarily due to an increase of $4.9 million in employee related costs, driven by an 8% increase in headcount, and an increase of $0.8 million in outside agency and consulting services costs, partially offset by a decrease of $3.2 million in subscription software contract expense. General and administrative expense as a percentage of revenue decreased 100 basis points year-over-year.

Previous wording

The $1.4 million increase for the three months ended July 31, 2024 was primarily due to an increase of $0.7 million in foreign currency gains and an increase of $0.6 million in interest income from our certificates of deposit, money market funds, and short-term investments due to a higher interest rate environment and higher cash and short-term investment balances.

Current wording

The $7.9 million decrease for the three months ended October 31, 2024 was primarily due the convertible debt inducement expense of $10.1 million, partially offset by a decrease of $1.6 million in foreign currency losses and an increase of $1.3 million in interest and accretion income from our money market funds and short-term investments due to a higher interest rate environment and higher cash and short-term investment balances.

Previous wording

The $2.9 million increase for the six months ended July 31, 2024 was primarily due to an increase of $1.7 million in interest income from our certificates of deposit, money market funds, and short-term investments due to a higher interest rate environment and higher cash and short-term investment balances, a decrease of $0.8 million in foreign currency losses, and a decrease of $0.6 million in interest expense related to our finance leases.

Current wording

The $5.0 million decrease for the nine months ended October 31, 2024 was primarily due to the convertible debt inducement expense of $10.1 million, partially offset by an increase of $3.0 million in interest and accretion income from our money market funds and short-term investments due to a higher interest rate environment and higher cash and short-term investment balances and a decrease of $2.5 million in foreign currency losses.

Previous wording

The $2.1 million, or 89%, increase for the three months ended July 31, 2024 was primarily due to an increase of $1.2 million in foreign non-cash deferred tax expense as a result of the release of the valuation allowance on our U.K. deferred tax assets in the fourth quarter of fiscal year 2024 and $0.9 million in higher foreign tax expenses as a result of increased profitability.

Current wording

The $1.9 million, or 74%, increase for the three months ended October 31, 2024 was primarily due to an increase of $1.3 million in foreign non-cash deferred tax expense as a result of the release of the valuation allowance on our U.K. deferred tax assets in the fourth quarter of fiscal year 2024 and $0.5 million in higher foreign tax expenses as a result of increased profitability.

Previous wording

The $4.4 million, or 95%, increase for the six months ended July 31, 2024 was primarily due to an increase of $3.5 million in foreign non-cash deferred tax expense as a result of the release of the valuation allowance on our U.K. deferred tax assets in the fourth quarter of fiscal year 2024 and $1.1 million in higher foreign tax expenses as a result of increased profitability.

Current wording

The $6.3 million, or 88%, increase for the nine months ended October 31, 2024 was primarily due to an increase of $4.8 million in foreign non-cash deferred tax expense as a result of the release of the valuation allowance on our U.K. deferred tax assets in the fourth quarter of fiscal year 2024 and $1.6 million in higher foreign tax expenses as a result of increased profitability.

Previous wording

As of July 31, 2024, we had cash and cash equivalents, restricted cash, and short-term investments of $483.3 million. During the six months ended July 31, 2024, we generated operating cash flow of $167.5 million. Since our inception, we have financed our operations primarily through equity financing, cash generated from operations and debt financing. We believe our existing cash, cash equivalents, and short-term investments, together with our credit facility, will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months and beyond. Our long-term capital requirements will depend on many factors including our growth rate, subscription renewal activity, billing frequency, public cloud obligations, repayment or refinancing of our debt obligations, settlement of our convertible senior notes and convertible preferred stock, the timing and extent of spending to support development efforts, the expansion of international activities, the introduction of new and enhanced service offerings, and the continuing market acceptance of our services. We may in the future enter into arrangements to acquire or invest in complementary businesses, services and technologies, including intellectual property rights. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.

Current wording

As of October 31, 2024, we had cash and cash equivalents, restricted cash, and short-term investments of $699.2 million. During the nine months ended October 31, 2024, we generated operating cash flow of $230.1 million. Since our inception, we have financed our operations primarily through equity financing, cash generated from operations and debt financing. We believe our existing cash, cash equivalents, and short-term investments, together with our credit facility, will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months and beyond. Our long-term capital requirements will depend on many factors including our growth rate, subscription renewal activity, billing frequency, public cloud obligations, repayment or refinancing of our debt obligations, settlement of our convertible senior notes and convertible preferred stock, the timing and extent of spending to support development efforts, the expansion of international activities, the introduction of new and enhanced service offerings, and the continuing market acceptance of our services. We may in the future enter into arrangements to acquire or invest in complementary businesses, services and technologies, including intellectual property rights. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.

Previous wording

For the six months ended July 31, 2024 and 2023, our cash flows were as follows (in thousands):

Current wording

For the nine months ended October 31, 2024 and 2023, our cash flows were as follows (in thousands):

Previous wording

For the six months ended July 31, 2024, cash provided by operating activities was $167.5 million. The primary factors affecting our operating cash flow during this period were our net income of $37.7 million, stock-based compensation of $106.3 million, amortization of deferred commissions of $26.5 million, and depreciation and amortization of our property and equipment, capitalized software, and intangible assets of $10.0 million. Cash provided by operating activities during the six months ended July 31, 2024 was further adjusted by net cash outflows of $15.4 million due to changes in our operating assets and liabilities.

Current wording

For the nine months ended October 31, 2024, cash provided by operating activities was $230.1 million. The primary factors affecting our operating cash flow during this period were our net income of $50.6 million, stock-based compensation of $161.9 million, amortization of deferred commissions of $39.4 million, depreciation and amortization of our property and equipment, capitalized software, and intangible assets of $15.9 million, and induced conversion expense of $10.1 million. Cash provided by operating activities during the nine months ended October 31, 2024 was further adjusted by net cash outflows of $45.3 million due to changes in our operating assets and liabilities.

Previous wording

The primary drivers for the changes in operating assets and liabilities include a $82.5 million decrease in deferred revenue from revenue recognition, partially offset by billings, a $19.3 million increase in deferred commissions resulting from capitalization of incremental commissions paid to our sales force, a $15.3 million decrease in operating lease liabilities due to recurring lease payments, and a $14.4 million decrease in accounts payable, accrued expenses and other liabilities primarily due to payments made in the period. These cash outflows were partially offset by a $103.3 million decrease in accounts receivables primarily due to timing of our cash collections and a $13.4 million decrease in operating right-of-use assets due to amortization.

Current wording

The primary drivers for the changes in operating assets and liabilities include a $91.2 million decrease in deferred revenue from revenue recognition, partially offset by billings, a $30.9 million increase in deferred commissions resulting from capitalization of incremental commissions paid to our sales force, a $21.7 million decrease in operating lease liabilities due to recurring lease payments, and a $10.5 million decrease in accounts payable, accrued expenses and other liabilities primarily due to payments made in the period. These cash outflows were partially offset by a $90.8 million decrease in accounts receivables primarily due to timing of our cash collections and a $18.1 million decrease in operating right-of-use assets due to amortization.

Previous wording

Cash provided by investing activities of $15.6 million for the six months ended July 31, 2024 was primarily driven by $79.5 million in maturities and sales of short-term investments and $6.0 million in proceeds from sales of property, partially offset by $56.5 million in purchases of short-term investments, $11.7 million in capitalized internally developed software costs, and $1.7 million of fixed asset purchases.

Current wording

Cash used in investing activities of $5.8 million for the nine months ended October 31, 2024 was primarily driven by $101.0 million in maturities and sales of short-term investments and $8.4 million in proceeds from sales of property, partially offset by $90.7 million in purchases of short-term investments, $19.0 million in capitalized internally developed software costs, $3.5 million in cash paid for an acquisition, and $1.9 million of fixed asset purchases.

Previous wording

Cash used in financing activities of $157.1 million for the six months ended July 31, 2024 was primarily driven by $138.7 million in repurchases of our common stock, $37.8 million of employee payroll taxes paid related to net share settlement of stock awards, $7.5 million of dividend payments to preferred stockholders, and $2.1 million of principal payments of finance lease liabilities. This was partially offset by $15.7 million from issuances of common stock under our employee equity plans and $15.4 million proceeds from exercise of stock options.

Current wording

Cash provided by financing activities of $5.0 million for the nine months ended October 31, 2024 was primarily driven by $449.0 million in proceeds from the issuance of the 2029 Convertible Notes, net of issuance costs, $30.3 million in proceeds from the settlement of capped calls related to the 2026 Convertible Notes, $25.9 million from issuances of common stock under our employee equity plans, and $16.2 million proceeds from exercise of stock options. This was partially offset by $191.7 million paid for the partial repurchase of our 2026 Convertible Notes, $168.7 million in repurchases of our common stock, $58.1 million of employee payroll taxes paid related to net share settlement of stock awards, $52.5 million for the purchase of capped calls related to the 2029 Convertible Notes, $30.0 million principal payments on our June 2023 Facility, $11.3 million of dividend payments to preferred stockholders, and $2.1 million of principal payments of finance lease liabilities.

Previous wording

In January 2021, we issued $345.0 million aggregate principal amount of 0.00% convertible senior notes due January 15, 2026. The Convertible Notes are senior unsecured obligations and do not bear regular interest. Each $1,000 principal amount of the Convertible Notes is convertible into 38.7962 shares of our Class A common stock, which is equivalent to a conversion price of approximately $25.78 per share, subject to adjustment upon the occurrence of specified events. We have made an irrevocable election to settle the principal portion of the Convertible Notes only in cash. Accordingly, upon conversion, we will pay the principal in cash and we will pay or deliver, as the case may be, the conversion premium in cash, shares of common stock or a combination of cash and shares of common stock, at our election.

Current wording

In January 2021, we issued $345.0 million aggregate principal amount of 0.00% convertible senior notes due January 15, 2026. The 2026 Convertible Notes are senior unsecured obligations and do not bear regular interest. Each $1,000 principal amount of the 2026 Convertible Notes is convertible into 38.7962 shares of our Class A common stock, which is equivalent to a conversion price of approximately $25.78 per share, subject to adjustment upon the occurrence of specified events. We have made an irrevocable election to settle the principal portion of the 2026 Convertible Notes only in cash. Accordingly, upon conversion, we will pay the principal in cash and we will pay or deliver, as the case may be, the conversion premium in cash, shares of common stock or a combination of cash and shares of common stock, at our election.

Previous wording

In June 2023, we entered into an amended and restated secured credit agreement to provide for a $150.0 million revolving loan facility with a $45.0 million sublimit for the issuance of letters of credit. Refer to Note 6 in Part I, Item 1. Financial Statements for a detailed description of the June 2023 Facility.

Current wording

In June 2023, we entered into an amended and restated secured credit agreement to provide for a $150.0 million revolving loan facility with a $45.0 million sublimit for the issuance of letters of credit. In September 2024, we paid down our $30 million debt outstanding and had no outstanding debt as of October 31, 2024. Refer to Note 6 in Part I, Item 1. Financial Statements for a detailed description of the June 2023 Facility.

Previous wording

Our Board of Directors has authorized a share repurchase plan to opportunistically repurchase shares of our outstanding Class A common stock in open market transactions. During the three months ended July 31, 2024, we repurchased 3.9 million shares at a weighted average price of $26.25 per share for a total amount of $101.9 million. During the six months ended July 31, 2024, we repurchased 5.3 million shares at a weighted average price of $26.48 per share for a total amount of $139.1 million. As of July 31, 2024, $24.6 million remained authorized and available for additional repurchases.

Current wording

Our Board of Directors has authorized a share repurchase plan to opportunistically repurchase shares of our outstanding Class A common stock in open market transactions and on August 25, 2024, our Board of Directors authorized the repurchase of an additional $100 million shares of our Class A common stock. During the three months ended October 31, 2024, we repurchased 1.0 million shares at a weighted average price of $29.78 per share for a total amount of $29.9 million. During the nine months ended October 31, 2024, we repurchased 6.3 million shares at a weighted average price of $27.01 per share for a total amount of $169.0 million. As of October 31, 2024, $94.6 million remained authorized and available for additional repurchases.

Previous wording

Our principal commitments consist of (i) obligations under operating leases for office spaces, (ii) purchase obligations not recognized on the condensed consolidated balance sheet as of July 31, 2024, which relate primarily to public cloud hosting services and IT software and support services, and (iii) debt, including obligations under both our June 2023 Facility and Convertible Notes. For more information regarding our obligations for leases, purchase agreements, and debt, refer to Notes 4, 5, and 6, respectively, in Part I, Item 1. Financial Statements.

Current wording

Our principal commitments consist of (i) obligations under operating leases for office spaces, (ii) purchase obligations not recognized on the condensed consolidated balance sheet as of October 31, 2024, which relate primarily to public cloud hosting services and IT software and support services, and (iii) debt, including obligations under our June 2023 Facility, 2026 Convertible Notes, and 2029 Convertible Notes. For more information regarding our obligations for leases, purchase agreements, and debt, refer to Notes 4, 5, and 6, respectively, in Part I, Item 1. Financial Statements.

Previous wording

There have been no material changes to our critical accounting estimates during the six months ended July 31, 2024 from those disclosed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended January 31, 2024.

Current wording

There have been no material changes to our critical accounting estimates during the nine months ended October 31, 2024 from those disclosed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended January 31, 2024.