Redeemable Convertible Preferred Stock and Stockholders' Deficit

9 Months Ended

Oct. 31, 2022

Stockholders' Equity Note [Abstract]

Redeemable Convertible Preferred Stock and Stockholders' Deficit

Note 10. Redeemable Convertible Preferred Stock and Stockholders’ Deficit

Series A Convertible Preferred Stock

On April 7, 2021, we entered into an investment agreement with a group of investors led by KKR & Co. Inc. (collectively “KKR”) relating to the issuance and sale of 500,000 shares of our Series A Convertible Preferred Stock, par value $0.0001 per share, for an aggregate purchase price of $500 million, or $1,000 per share. The closing of the issuance occurred on May 12, 2021 (the “Closing Date”).

The Series A Preferred Stock rank senior to our Class A common stock with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of Box. The Series A

Preferred Stock initially have a liquidation preference of $1,000 per share. Holders of the Series A Preferred Stock are entitled to a cumulative dividend (the “Dividend”) at the rate of 3.0% per annum, compounding quarterly, paid-in-kind or paid in cash, at our election. For any quarter in which we elect not to pay the Dividend in cash with respect to a share of Series A Preferred Stock, such Dividend will become part of the liquidation preference of such share, as set forth in the Certificate of Designations designating the Series A Preferred Stock (the “Certificate of Designations”). During the nine months ended October 31, 2022, we paid cash dividends to our Series A Preferred Stockholders in the amount of $11.3 million and as of October 31, 2022, we had accrued dividends of $1.3 million on the Series A Preferred Stock. Accrued dividends are recorded against additional paid-in capital due to Box being in an accumulated deficit position. During the nine months ended October 31, 2022, we recognized $1.6 million of accretion.

The Series A Preferred Stock is convertible at the option of the holders thereof at any time into shares of Class A common stock at an initial conversion price of $27.00 per share. At any time after the third anniversary of the Closing Date, if the volume weighted average price of our Class A common stock exceeds 200% of the conversion price set forth in the Certificate of Designations, for at least 20 trading days in any period of 30 consecutive trading days, including the last day of such trading period, at our election, all of the Series A Preferred Stock will be convertible into the applicable number of shares of Class A common stock.

There have been no changes to the voting rights or redemption terms of the Series A Preferred Stock during the nine months ended October 31, 2022 from those disclosed in Item 8. Financial Statements and Supplementary Data in our Form 10-K for the fiscal year ended January 31, 2022.

Share Repurchase Plan

Between July 2021 and October 31, 2022, our board of directors authorized the repurchase of up to an aggregate of $610 million of shares of our Class A common stock. As of October 31, 2022, we had used approximately $585.9 million to repurchase 23.2 million shares. During the three months ended October 31, 2022, we repurchased 1.1 million shares at a weighted average price of $26.38 per share for a total amount of $29.1 million. During the nine months ended October 31, 2022, we repurchased 9.9 million shares at a weighted average price of $26.03 per share for a total amount of $257.4 million.

Subsequent to October 31, 2022, our board of directors authorized up to an additional $150 million expansion of the Share Repurchase Plan on November 29, 2022. Under this expansion, shares may be repurchased in open market transactions until the earlier of November 29, 2023, or until $150 million of our Class A common stock has been repurchased.