Box, Inc. (BOX) Earnings Call Transcript & Summary

Great. Welcome back, everybody. I'm Brad Zelnick, software equity research analyst here at Deutsche Bank. And for this session, we are delighted to be joined by the good folks over at Box. We have Co-Founder and CEO, Aaron Levie; and Chief Financial Officer, Dylan Smith. Guys, welcome. Thanks so much for being here.

Awesome. Really good to be here. Thanks for having us this morning.

Certainly. Format of this session. We are going to open up with a handful of slides. At which point, then we will go to Q&A. I've got a number of questions that I would like to ask of both Dylan and Aaron, and there's also a capability for you all to chime in the chat box and submit a question as well, in which case, I will try to work it into the conversation. But without further ado, why don't we hand the slide presentation over to you guys?

Awesome. Thanks, Brad. I'm just going to do a couple of quick intro slides just to walk everybody through the latest on our strategy. Box has evolved quite a bit just in the past few years and wanted to ensure that all investors have a good sense of what we're up to and what we're working on. And then obviously, dive into your questions. Kind of standard forward-looking statements apply here. So I trust that everybody knows that. So when we started Box, our vision and mission was to really power how the world works together. We started the company in 2005. And if you kind of go back in time to 2005, we were on Blackberries, Internet speeds were pretty slow. You certainly could never have done one of these conferences as efficiently as we can today. And we are -- and we were very focused on a brand-new way to be able to work with your information from any device, any location and anywhere. And when we launched the company, we really -- soon after launching, and we pivoted to the enterprise. And our whole focus was how do we enable enterprises to be able to securely store, share and collaborate on all their files from any device. And fast forward now to 2021, we're in the 67% of the Fortune 500. We have over 100,000 customers that are leveraging our platform. And what's really exciting about Box, and I think why we get so passionate about the work that we do, is we get to work in every single industry and in every size company. So we work with everything from Amazon and Cisco and IBM, and some of the world's largest technology companies as well as digital disruptors like Airbnb or Spotify and other fast-growing tech companies. We also work in life sciences and financial services and the federal government. So really every single industry. But what you'll find is that there's a commonality across all of the industries that we serve, which is customers that care about 3 really important factors in how they work with their data. One, they have to be able to work from anywhere. So they're working on any device, they're working in any location. And we know that more and more, we're moving to much more of a hybrid work style as well that is obviously becoming a much bigger factor in how work is happening. The second is that every transaction is becoming digital first. So we knew that we're moving from paper and analog systems to the cloud, and we need to digitize every single business process. And then finally, data security, ransomware, all of the very severe security issues that we're seeing are only becoming more rampant. And so when we look at the trends today that are shaping our business, they're actually much more significant than even the trends that when we started the company we had, that propelled our initial growth. So essentially, what we get really, really excited about is we're actually in the very early innings of a broader transformation and how work is getting done and how content is at the center of that work, which then brings us to the content management sort of evolution. In the '90s, you had on-prem storage; in 2000s, you had document and enterprise content management systems; in the 2010s, you had EFSS tools. And we think that each of these technologies were sort of appropriate for their time. But they don't really solve the main issue today, which is work from anywhere, digitize their processes, connect to all of their applications, all with a single platform. And that's our vision for the category of cloud content management. And what we're trying to do is build the Content Cloud that will power the entire life cycle of content from the moment that you ingest it from any system to when you protect it and classify it with something like Box Shield, which is our advanced security suite, to when you collaborate inside and outside of your enterprise, to being able to drive work full automation with Box Relay, to getting e-signature signed on a document with Box Sign, to being able to publish content internally and externally to different departments and teams, analyzing the strength of that content and how useful it is from your customers and your partners and what content are people most looking at, the ability to then retain and govern and protect content over the long run, that's our governance module, Box Governance, and then the ability to take every one of these capabilities and extend them via our APIs into any other application. And so this is our vision for the Content Cloud. And for those that have been paying attention to Box for maybe a number of years, you'll see this as a pretty methodical evolution to our platform. But absolutely, the biggest vision that we've ever had in terms of what we are building out. And I'll get to one great example of that, that we launched recently, which is Box Sign in just a couple of seconds. So we're going after a $55 billion plus market and e-signature has only added to the potential TAM size and this is certainly going to be bringing even more dollars into the platform. But it's really the combination of the storage market, the content management market, take certain parts of the data security and risk management space and then the broader content collaboration space. So again, about a $55 billion market, growing in a fairly healthy rate and becoming only more important as time goes on when you think about remote work, digital transformation and data security. And so our platform is really meant to be the most extensive Content Cloud in the market. What we spend our time on at Box is building out really robust capabilities around security, collaboration, content management, workflow. And then we extend those capabilities via our platform to a number of partners. So we have a very significant partnership with Microsoft. We work with Microsoft Teams, we work with Microsoft Office, we work with Slack, we work with Salesforce, we work with ServiceNow, we work with IBM. So our job is to be the #1 platform where you store, manage, secure content and then drive workflows and business processes around it and then extend that content into any application that you're leveraging. And when we do that, we then can power mission-critical workflows across the entire enterprise. We have a lot of investors and certainly customers also that say, "Well, what kind of use cases can you solve with Box?" And it really truly is an enterprise-wide platform offering. So marketing teams can enable digital asset management, sales teams can collaborate with clients, operations teams can work across their supply chain, R&D teams are able to develop and design new products, HR teams can enable onboarding of employees, finance teams doing virtual data rooms. So really across the entire enterprise, content is at the heart of business and businesses run on content. And that is why we built the Content Cloud and why we sit at the center of such important work that our customers are doing. And so what you're going to see going forward is we're just going to keep doubling down on the strategy. We have massive advancements that we're going to be making at BoxWorks around Box security functionality, advanced security capabilities and data governance features. We have new innovation around workflow automation and collaboration. And then we're going to be advancing our platform and our integrations with every major vendor that our customers are working with, again, Microsoft, Zoom, Salesforce, Cisco, IBM and so many others. And one new area that gives you really kind of a good sense of how we're going to be prioritizing innovation is we're going to be expanding into additional categories where we think they are adjacent to the content workflow, but we want them to be native on the Box platform and delivered very seamlessly to customers. And that's where Box Sign comes in. So Box Sign is probably one of the biggest products we've ever launched just in general, and certainly the biggest new product that we've launched in the past couple of years. We acquired a company at the start of the year in January, and then we rapidly integrated the technology. We did our first rollout this summer at the end of July, and we're going to be rolling out the product throughout the fall to all of our customers. But Box Sign is a natively-integrated, e-signature product on the Box platform. And the really, really powerful thing is our business model approach here. We're going to be offering this product included in our business and enterprise subscriptions with varying degrees of advanced functionality as our customers have higher plans that they have. And so this is going to mean that every single one of our customers are able to use Box Sign. And for more advanced use cases and for larger enterprises, we'll have additional ways to monetize that usage via our APIs and more advanced functionality. So we both are going to use Box Sign to go wider and deeper within customers as well as to have additional monetization vectors over time. And so that brings us to our go-to-market strategy that I'll just kind of quickly breeze through. But ultimately, our strategy is to drive the widest penetration of Box. And so we have a very repeatable land, adopt, expand and retain motion. And our focus is really threefold: drive massive seat adoption within new and existing customers; continue to improve our price per seat by moving customers up our plan types; and then improve net retention by both making Box more and more sticky, but then also expanding our customers. And you're really starting to see this in the numbers over time. So our shift to multiproduct solution selling is really paying off. Just this last quarter, in Q2, we had 73% of our deals that were above $100,000 -- were our multiproduct bundles in the form of Box Suites. And we're doubling that on those bundles by introducing an Enterprise Plus plan that makes this even easier for customers to get our multiproduct advantages. And we're really starting to show, I think, the results of this strategy paying off. In Q2, we had 106% net retention rate, certainly meaningfully up since the past 4 quarters. And we've got -- we've at least targeted that, that number will continue to go higher over time as well. So this is something that's super meaningful as we continue to grow going forward. And we are also really executing on our reacceleration strategy. So we talked about how Q4 of last year was really the kind of trough in our growth rate at a little over 8%. But now we're really executing this strategy and again, grew a little over 10% in Q1, a little over 11% in Q2 -- sorry, nearly 12% in Q2, and then we've guided up throughout the rest of the fiscal year. So our reacceleration strategy is playing out. Our focus right now is really, again, turbocharging this growth going forward. And you will continue to see that in the results and based on the guidance that we've put out. So we did raise our guidance pretty meaningfully in the last quarter for the full year. And then finally, from a long-term model standpoint, what we've targeted is really getting to Rule of 40 by FY '24. This has been a multiyear evolution, going back actually over 2 years ago that we laid out this framework, and we have been executing exactly to this framework, and we now have both last full fiscal year exceeding the results that we targeted, and already this fiscal year, guiding up above our initial target. And so that's the -- for us, the combination of revenue growth and free cash flow margin really starting to play out. And then I'll finally just close up and then open up for any questions and then obviously, Dylan, if you want to add anything on the pure financial front, just wanted to breeze through this. Certainly, really focused on, again, long-term growing profitably and driving, again, a reacceleration on the top line. And so we've guided to 12% to 16% revenue growth by FY '24, while still continuing to put up healthy margin improvement on the bottom line, really getting to 23% to 27% operating margin by FY '24 as well. So this is our sort of -- now becoming more of a medium-term financial target by FY '24, but we have been executing that for this plan for 2 years, and we think putting up very consistent results in this path. So Dylan, anything you want to add on that?

No. I think we can open it up for Q&A.

Cool. Yes. Thanks, Brad. I think you're on mute, Brad.

Yes. I think -- here I am. And apologies, by the way, I've been having some connectivity issues, but I think I'm okay. That was a great presentation, Aaron. Thank you so much for that. I want to focus my questions on the fundamentals of the business and the bright opportunity that's ahead. But before I do, I just want to ask one question. You've had an ongoing proxy contest. You had that, I believe, come to an end yesterday. Is there anything that you want to say as it relates to the events that led up to that just before we move on to the future?

Sure. Yes. I mean, in general, we were certainly pleased with the shareholder vote, and we were happy about the outcome on that. We had sort of -- size myself. And so won't speak for myself, but at least in the other 2 directors, very, very strong independent directors up for reelection. Peter Leav, he's the CEO of McAfee and formerly the CEO of BMC; and we had Dana Evan, who was the founding CFO of Verisign. She's on the Boards of Domo, Momentive, which was formally SurveyMonkey. She was the lead Independent Director of Proofpoint, obviously, amazing outcome in that business. So we had a really strong Board slate that we were very proud of. And overall, as a company, we've been transforming this business now for well over 2 years. And I think there were definitely things back in 2019 and prior to 2019, where we knew we had to improve around operating margin, driving the reacceleration of the growth, really making sure our product portfolio is set up in the right way. But we have worked over the past 2 years to really, really transform both those top and bottom line results. And we're very happy about the, I think, constructive interactions we've had with shareholders in -- not just in the past 6 months, but in the past couple of years. And we will continue to absolutely listen to shareholders, any and all feedback is appreciated. We will continue to evolve our strategy going forward in the way that we think is going to work for both the near, medium and long term. And we're really excited about the path forward as a company. But again, we do want to be as collaborative and constructive as possible with any and all shareholders and we appreciated the dialogue that we had over the past couple of quarters.

It makes sense. It's the only way and you've got some great software experience and representation on your Board. Very clear, and we know a lot of those people. So maybe just to get back to the business, one of the things that I found most interesting to come out of these events is the positioning of "The Box of 2019 is not the Box of today." And you touched on this a bit in the presentation, but can you just explain what's changed and what might new investors or previous investors not understand about Box today?

Yes. I think there's probably just -- there's a product element, a go-to-market element and then a financial element. And so just in kind of very quick order, on the product side, our multiproduct strategy is now both much more mature and much more evolved. So when we first took our company public, we knew that we were going to be a multiproduct company. We had some really great success with our governance module, our platform module. But we did probably have a couple of years where we didn't innovate fast enough in certain key product areas. And I think what you're seeing now in the past 2 years is a very different pace of innovation. We've really kind of been introspective and looked at whether it's the leadership in the team or strategic decisions that we've made. And so if you think now, the past 2 years, we have Box Shield, which is our most advanced and the most advanced security module in the market. We have Box Relay, which is a workflow automation suite that we're going to only continue to build out. We now have Box Sign, which is an e-signature built directly into Box. We have new modules that we haven't announced yet that will continue to advance the platform story over time. And then all of that is aided by an end-to-end platform that is a single architecture, that is a cloud-only architecture, that has given us an incredible amount of innovation leverage that none of our competition has in the enterprise space. So that's the first thing, is the product evolution has been really, really key to the recent couple of years, but importantly, the past kind of 3 quarters when you see those successive improvements in growth rates. The second is on the go-to-market front. We have, I believe, really gotten into a much better rhythm as a company in terms of our repeatable sales motion. Instead of going to a customer and selling each individual product one by one, "Would you like to buy our governance module? Would you like to buy our Shield module?" We come to our customers with our full platform story. That was first aided by Suites, which was our bundled packaging that we could bring to a customer. And now we're even standardizing on that multiproduct selling with an enterprise plan that lets customers buy the entire suite of capabilities as just one of our core SKUs. So what you're going to see is a continued transformation of our sales motion that really simplifies the selling motion for our sellers, simplifies the buying motion for the customer and helps enable this land and expand strategy that we've been executing. And I think you're now seeing that in net retention. You're seeing that in our large deal growth. You're seeing that in the number of suites or multiproduct bundles that our customers are buying. So really, really great performance on that front. And then finally, I think on the financial front, I will let Dylan maybe build on this, we have driven a very, very different approach to operating margin leverage really across the organization. So Dylan, I don't know if you want to call out some of the work that we've done on that front.

Sure. So over the last couple of years, we've improved our operating margins by roughly 20 points, really taking a hard look across the business, really focusing on the go-to-market efficiencies, driving significant sales force productivity along the way, also very focused on gross margins. So as we continue to scale into our data center footprint, deliver hardware and software efficiencies and increasingly leverage our public cloud partnerships, that should continue to improve our gross margins. We're already seeing this pay off, driving a steady decrease in capital lease liabilities and payments over the past several quarters and higher gross margin. And then another area that we're beginning to deliver leverage and expect to continue delivering even more from is our workforce and location strategy, so over the next few years, we expect the majority of our headcount growth to be in lower-cost locations, most notably in Poland, to diversify our engineering talent pool and to scale R&D investments more efficiently over time. And then finally, as we continue to shift more of our customers into higher-value use cases, as Aaron has been talking about, and as our customer base scales and more of our sales come through inherently more profitable customer renewals, customer expansion, that is having positive impacts on our overall financial profile as well.

All makes sense to me. And my next question may be a bit naive but as we think about the strategy of Box today, has this in any way changed the competitive dynamics with Microsoft and Google?

Yes. I think dramatically, I think, improved our relationships on both of those fronts. And I'll give you just two quick examples. So at Google, we have a massive cloud partnership with them. We have a very kind of multifaceted working relationship with the Google kind of cloud business, both on infrastructure as well as a deep partnership with all of their integration across Google Workspace. So things like native integration with their Google Docs products for Sheets and Slides interoperability. So we are very interoperable with the Google suite. We also have strength in our partnership with Microsoft dramatically. I think there's -- probably the single maybe greatest misnomer maybe in the market is Box somehow competes with OneDrive. We do sometimes hear that. And that -- maybe that was true 5 years ago. But really, when customers buy Box, first of all, 67% of our customer base is in the Fortune 500. We're in 67% of the Fortune 500. You can almost imagine 100% of those customers are big Microsoft shops. So they're using the Content Cloud in conjunction with their Microsoft suite. The reason for that is that we have a single architecture for the complete workflow around content, from storage, sharing, security, compliance, collaboration, workflow automation, e-signature, all in one platform. And then we integrate with Microsoft Teams, we integrate with Microsoft Office, we integrate with Windows deeply, we integrate with Azure Active Directory. So we integrate -- probably if you look at the total universe of Microsoft products, we probably partner with about 95% of all the technology that they deliver. And we compete in a very, very small sliver. And so our customers are using our platform in conjunction with Microsoft to really be able to go and deliver their digital transformation that they're driving.

Awesome. Helpful context. I want to maybe turn to the success that you're seeing with Suites. I think in Q2, you had an attach rate of 73% for deals over $100,000, which is really impressive. Can you explain what drove the sequential improvement? And where do you see this attach rate going? And is there any one function, in particular, in Suites that's garnering the most positive feedback?

Yes. So I think this has been now a couple of years of building up of execution, and it's one of those things where obviously it doesn't just happen overnight, but we're now benefiting from a compounding, I think, rate of improvement. We have made compensation changes 2 quarters back to -- from an incentive structure standpoint for our sales reps to ensure that incrementally, they're focused on multiproduct selling as opposed to single product selling. So that was has an important lever. And then we've done massive training and enablement and really restructured a lot of our sales motion around going to customers with this multiproduct suite and offering. So I think it's something that now is just embedded into the culture of Box, and it's embedded into our sales methodology as well as into the compensation plans of our sales reps. And then in terms of the kind of catalytic driver for customers, I think Shield is probably still the maybe the main additional product that is catalyzing the customer to see Box in that more platform-oriented light in terms of why do I want to buy a multiproduct suite. But governance is still insanely important for our customers. Workflow automation is incredibly important. And I think if we're having this conversation 6 months from now, looking at the latest results, Sign is going to be then another big driver that's going to be out there. And just please note that Sign was only available for maybe 4 days within our last fiscal quarter. So we officially announced the product at the very end of Q2. So we don't have any individual bookings related to our Sign API volume, and it really didn't drive any of the revenue other than just the awareness of Sign is very positive because customers are excited about adopting that solution.

Understanding that it was only 4 days, anything just even in terms of quarter-to-date? I don't expect you're going to give us kind of a bookings number or anything right on the spot. But early indications, I can imagine, are very encouraging. Is there any -- even qualitatively something that you can share with us?

I think qualitatively, what I'd share is, I have not been in a CIO conversation, really actually in the past couple of months, where Sign wasn't a major pillar of the conversation. And I think it's sort of like there's two reasons that are driving this. I think in a lot of cases, there are a couple of e-signature incumbents that have done amazingly well, which is very exciting, and we don't want to particularly compete with any one company. But there are still massive pockets of organizations that have not gone out to purchase one of those incumbent solutions, maybe it's cost prohibitive, maybe they, maybe they're not at that stage in the journey where they're scaling out the product. And so our customers, resoundingly, are excited about the idea that a Box license, gives you a license to e-signature. And that is going to enable more use cases for our customers. It's going to enable more stickiness for our customers. And we think we're still in the very, very early innings of the e-signature market. And so we're very excited about the path forward. We will continue to, of course, partner with any e-sign provider that our customer wants to use. We've got fantastic partnerships with DocuSign and Adobe and others. But we also are going to have a native offering for our customers, who want just a seamless Box solution as well.

Very cool. Maybe for you, Dylan, as we think about the broader move to Suites in your enterprise base, how does that impact your financial model? And in specific, which metrics should we see improve first, whether it be NRR, ACV, gross margins? Like how do we think about that impact?

Sure. So as a greater proportion of our sales and revenue base are attributable to Suites, that should drive positive impacts on our financial model, really top to bottom from higher pricing and average contract values, to stronger customer retention and expansion rates, to a greater overall profitability. And so where this is going to show up most immediately is in our leading indicators of growth. The Suites traction has a positive impact on things like our deal metrics as large -- our large deal counts, average contract values as well as sales force productivity and RPO growth. And then as customers adopt Suites and are successful using Suites, this should drive an improvement in our overall net retention rate, which is a trailing 12-month metric, as the customers who've adopted our more advanced capabilities currently have a net retention rate roughly 20 points higher than those who haven't. And then finally, as these more profitable sales and our growing expansion of renewal base continue to evolve, that will translate into higher gross margins and operating margins overall.

Very good. Before I jump into the next question, I just want to remind everybody, you can submit a question. It's totally anonymous. I will not call you out and -- neither yourself, your name, your firm or anything like that, but I will keep my eyes on the Q&A box I have here on my end. But maybe if I can turn to you, Aaron, on the go-to-market changes as part of the strategy that you touched on. And I know that like it's never finished, like literally and figuratively, any sales organization go-to-market as a living and breathing organization for that matter, where are you though in terms of the more substantive recent changes that you've been making? And is there a point at which you think you've completed -- or some milestone or destination that you're trying to hit?

Yes, I think there was probably some step function sort of methodology and strategy improvements. And I would say that we are through the bulk of those operational and key execution decisions that now have been baked into how we execute. So when I think about methodology, it's what's the land and expand, repeatable sales motion, what are the use cases that we're going after, what's the pricing and packaging that we're going to be able to use to go and drive upsells of customers? That's baked in. We also have done, I think, a significant amount of work to, in some cases, rebuild, in other cases, evolve, leadership across our global sales and customer-facing organization. So I'm really, really happy about the talent that we have in place going forward. That being said, as you reach each new kind of level of scale, you're always finding new things to work on and new areas that we have to improve. Maybe there's some international region that we really got to dive into and help support. But when I look at the -- at least at the global leadership level, Head of EMEA, the Head of Japan, the Head of our global sales force, our CRO, I think we're in a really good spot. And then multiple layers down, we're in a very good spot. And our strategy and execution, I think, is very well positioned to execute going forward.

And just on top of that, Aaron, in terms of sales capacity, I think you had said a low-teens growth rate for fiscal '22. How do we think about the weighting of that first half versus second half? And when should we expect the additional capacity to be more productive or fully ramped?

Yes, I can take that. And I think you can think about the growth rate as being fairly consistent across the year. So we have been incrementally growing our sales force and expect to continue that growth in the second half of this year in order to deliver against that FY '22 hiring target that you mentioned. And the additional capacity resulting from this hiring will really become fully ramped over the course of next year with the full impact in the back half of next year. As a reminder, our enterprise sales force typically takes 9 to 12 months to fully ramp while our commercial sales force tends to ramp in about 6 months. So the acceleration in top line growth that we've been achieving this year has primarily been driven by strong improvements in sales force productivity. And then for next year, we expect our growth to be driven by a combination of that incremental capacity and continued sales force productivity improvements.

Great. Listen, we do have a question from an old friend, but I won't mention his name. Is Box positioned well to win federal content management contracts? Or does Box still need to work on FedRAMP and systems integrator partnerships?

Yes. Yes, great question. We are very well positioned for that. We are FedRAMP certified. We're actually working on now the highest level of FedRAMP certification. We do have existing SI partnerships. We do a lot of work with some of the global SIs in the Fed space. We do work with IBM and others around key Fed use cases. Some recent public announcements that we've made, we're used across the U.S. Department of Agriculture, the Department of Justice, in multiple instances across our military and then much broader use cases as well that we can't get into. But we are definitely seeing a lot of traction at the federal level. And one interesting even kind of exciting maybe pocket of momentum we're also seeing is even at the state and local level, when you think about all the health care initiatives being executed at a state level, we're seeing deals come in around digital transformation, even in some of the bigger states in the country. So I think we're seeing good momentum all around across any of our public sector business.

Awesome. Maybe a question just about M&A. Box Sign, very exciting opportunity. This was done through the acquisition of SignRequest. How do you look at organic versus acquisitions for bringing new features to the platform? And what are areas are you now focusing on in the Content Cloud platform?

Yes. So if you think about that content life cycle, it started with getting the data and then ended with that data being on platform for an indeterminately long amount of time, retention policies, in some cases, we have customers that need to store files in Box for 5 or 7 or 10 years, kind of a pure corporate policy. So you can imagine the kind of stickiness of that. So that entire life cycle we want to power. And what's exciting about this space is the amount of additional categories that are happening in that life cycle are actually continuing to evolve or at least offer disruption opportunities as we move to the cloud. When you think about data privacy and e-discovery, pretty interesting areas that customers are going to start to care a lot more about. When you think about how do you collaborate on content or publish content in new ways, maybe you want to enable a sales team to have access to the right sales assets when they're working with their customers or an HR team to be able to distribute the latest kind of corporate policies internally. So you have interesting use cases around content publishing and collaboration. We have all new investment areas around security and compliance. Ransomware has clearly become one of the most topical issues for CIOs today. So as we think about that content life cycle, in every single one of those areas, there is either ways of doubling down in that pillar or a pillar that is emerging between two other spaces that we're already in. And I think our -- probably our default bias is to organically build a lot of this innovation. But as was the case with e-signature, there are times where you kind of do a cost-reward trade-off of how long is it going to take you to enter the market, how fast is that market moving, how important is it to have a robust offering on day 1. And in that case, it was unequivocally clear that we needed to accelerate our entry into the space through a very prudent acquisition and that was the SignRequest deal. So we will absolutely be inorganic when that has a very clear business justification and it's in line with our long-term targets that we've put out. So we will be executing toward that Rule of 40 by FY '24. So we won't do an M&A deal that would veer us off that as an example.

Cool. I think we're about out of time. I've got one more to sneak in under the wire for Dylan, if I might. Dylan, just on the margin improvement, I mean, over the last couple of years, you've made a lot of headway going from about flat to 20% op margin. But now as we look to your target for fiscal '24, I think you've got a 23% to 27% range. And as we think about the levers that get you there, if we look back, what kind of -- should we really be paying attention to that gets you steeper into that trajectory? Or what gets you from the low end to the high end? And what are the greatest opportunities from here?

Sure. So hit on some of these earlier, but we will a bit. We remain committed to and confident in delivering consistent profitability improvements in the coming years. Most of that is going to be continuing to build on the efforts that I mentioned earlier that drove that roughly 20-point improvement in operating margin over the past couple of years. And then in some of the areas, we've really planted the seeds more recently and expect to leverage the kind of profitability benefits and efficiencies going forward and would call out both gross margin, which I spoke to as well as really building out our presence around our -- in Poland, in particular, in our lower cost location strategy overall as being 2 big drivers that are well underway, but we've not fully achieved the benefits in the financial model as of yet. So for example, on the Poland side, going from a standing start about a year ago, we expect to have more than 100 full-time employees on the ground by the end of this year and then scale from there. And then lastly, I mentioned this a bit in the context of Suites, but our customers have much stronger economics when they're using our more advanced capabilities. They have higher pricing, stronger retention, higher gross margins, all of those things. And so as our strategy to get Suites in front of more and more customers, continues to play out and that becomes a bigger and bigger portion of our overall customer base, that will have positive impacts on our bottom line as well. So all of those factors alongside, share our continued focus on driving cost discipline, really emphasizing, making investments in the areas of the business that are showing strong productivity and getting that return is what sets us up nicely to improve both growth and profitability over the next couple of years as we deliver against those FY '24 targets.

Great. Thank you for that, Dylan. And I think with that, we're about out of time. Aaron, Dylan, always a pleasure to see you guys. Thanks so much for participating in this year's conference. And congrats on all the recent success.

Thanks, Brad. Really appreciate it.

Really appreciate it, Brad.