10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2021  

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from         to        

Commission File Number 001-36805

Box, Inc.

(Exact name of registrant as specified in its charter)

Delaware	20-2714444
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

900 Jefferson Ave.

Redwood City, California 94063

(Address of principal executive offices and Zip Code)

(877) 729-4269

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.0001 par value per share	BOX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Small reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐    No   ☒

As of May 28, 2021, the number of shares of the registrant’s Class A common stock outstanding was 162,789,262.

TABLE OF CONTENTS

	PART I – FINANCIAL INFORMATION	Page
Item 1.	Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets as of April 30, 2021 and January 31, 2021	5
	Condensed Consolidated Statements of Operations for the Three Months Ended April 30, 2021 and 2020	6
	Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended April 30, 2021 and 2020	7
	Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended April 30, 2021 and 2020	8
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 30, 2021 and 2020	9
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	39
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 6.	Exhibits	62
	Signatures	65

2

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

• our future financial and operating results; including expectations regarding revenues, deferred revenue, billings, remaining performance obligations, gross margins, operating income, and net retention rate;

• our ability to maintain an adequate rate of revenue and billings growth and our expectations regarding such growth;

• our market opportunity, business plan and ability to effectively manage our growth;

• our ability to achieve profitability and expand or maintain positive cash flow;

• our ability to achieve our long-term margin objectives;

• our ability to grow our remaining performance obligations;

• our expectations regarding our revenue mix;

• costs associated with defending intellectual property infringement and other claims and the frequency of such claims;

• our ability to attract and retain end-customers;

• our ability to further penetrate our existing customer base;

• our ability to displace existing products in established markets;

• our ability to expand our leadership position as a cloud content management platform;

• our ability to timely and effectively scale and adapt our existing technology;

• our ability to innovate new products and features and bring them to market in a timely manner and the expected benefits to customers and potential customers of our products;

• our investment strategy, including our plans to further invest in our business, including investment in research and development, sales and marketing, our data center infrastructure and our professional services organization, and our ability to effectively manage such investments;

• our ability to expand internationally;

• expectations about competition and its effect in our market and our ability to compete;

• the effects of seasonal trends on our operating results;

• use of non-GAAP financial measures;

• our belief regarding the sufficiency of our cash, cash equivalents and credit facilities to meet our working capital and capital expenditure needs for at least the next 12 months;

• our expectations concerning relationships with third parties;

• our ability to attract and retain qualified employees and key personnel;

• our ability to realize the anticipated benefits of our partnerships with third parties;

• the effects of new laws, policies, taxes and regulations on our business;

• management’s plans, beliefs and objectives, including the importance of our brand and culture on our business;

• our ability to maintain, protect and enhance our brand and intellectual property;

3

• acquisitions of or investments in complementary companies, products, services or technologies and our ability to successfully integrate such companies or assets;

• the KKR-led investment in Box and achievement of its potential benefits;

• any potential repurchase of our Class A common stock;

• the potential impact of shareholder activism on Box’s business and operations; and

• the impact of public health epidemics or pandemics, such as the COVID-19 pandemic, and governmental responses thereto.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or to changes in our expectations, except as required by law.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the SEC as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance, and events and circumstances may be materially different from what we expect.

4

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

BOX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	April 30,			January 31,
	2021			2021
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	561,459		$	595,082
Short-term investments		50,000			—
Accounts receivable		112,253			228,309
Prepaid expenses and other current assets		26,371			16,785
Deferred commissions		39,514			39,110
Total current assets		789,597			879,286
Property and equipment, net		146,100			160,148
Operating lease right-of-use assets, net		183,401			194,253
Goodwill		75,597			18,740
Deferred commissions, non-current		63,487			66,481
Other long-term assets		51,949			32,774
Total assets	$	1,310,131		$	1,351,682
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable, accrued expenses and other current liabilities	$	34,904		$	32,128
Accrued compensation and benefits		20,761			39,123
Finance lease liabilities		47,110			49,888
Operating lease liabilities		43,881			47,771
Deferred revenue		406,049			443,929
Total current liabilities		552,705			612,839
Debt, net, non-current		366,061			297,614
Finance lease liabilities, non-current		49,877			60,351
Operating lease liabilities, non-current		182,348			192,531
Deferred revenue, non-current		17,200			21,684
Other long-term liabilities		17,127			15,598
Total liabilities		1,185,318			1,200,617
Commitments and contingencies (Note 8)
Stockholders’ equity:
Class A common stock, par value $0.0001 per share; 1,000,000 shares authorized; 162,762 shares    (unaudited) and 159,851 shares issued and outstanding as of April 30 and January 31, 2021, respectively		16			16
Additional paid-in capital		1,462,038			1,474,843
Treasury stock		(1,177	)		(1,177	)
Accumulated other comprehensive loss		(371	)		(938	)
Accumulated deficit		(1,335,693	)		(1,321,679	)
Total stockholders’ equity		124,813			151,065
Total liabilities and stockholders’ equity	$	1,310,131		$	1,351,682

See notes to condensed consolidated financial statements.

5

BOX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

	Three Months Ended
	April 30,
	2021			2020
Revenue	$	202,441		$	183,561
Cost of revenue		60,947			53,995
Gross profit		141,494			129,566
Operating expenses:
Research and development		50,859			53,114
Sales and marketing		69,811			72,750
General and administrative		31,087			27,942
Total operating expenses		151,757			153,806
Loss from operations		(10,263	)		(24,240	)
Interest and other expense, net		(3,999	)		(1,103	)
Loss before provision for income taxes		(14,262	)		(25,343	)
Provision for income taxes		311			207
Net loss	$	(14,573	)	$	(25,550	)
Net loss per share, basic and diluted	$	(0.09	)	$	(0.17	)
Weighted-average shares used to compute net loss per share, basic and diluted		161,733			151,943

See notes to condensed consolidated financial statements.

6

BOX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)

	Three Months Ended
	April 30,
	2021			2020
Net loss	$	(14,573	)	$	(25,550	)
Other comprehensive income (loss)*:
Changes in foreign currency translation adjustment		273			(152	)
Changes in unrealized loss on cash flow hedge		294			(1,180	)
Other comprehensive income (loss)		567			(1,332	)
Comprehensive loss	$	(14,006	)	$	(26,882	)

* Tax effect was not material

See notes to condensed consolidated financial statements.

7

BOX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

	Three Months Ended April 30, 2021
	Class A Common Stock				Additional Paid-In			Treasury			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Capital			Stock			Loss			Deficit			Equity
Balance as of January 31, 2021		159,851	$	16	$	1,474,843		$	(1,177	)	$	(938	)	$	(1,321,679	)	$	151,065
Cumulative adjustment due to adoption of    ASU 2020-06		—		—		(68,576	)		—			—			559			(68,017	)
Issuance of common stock under    employee equity plans, net of shares    withheld for employee payroll taxes		2,911		—		(1,878	)		—			—			—			(1,878	)
Stock consideration in connection with    fiscal 2022 acquisition		—		—		10,000			—			—			—			10,000
Stock-based compensation related to    stock awards		—		—		47,649			—			—			—			47,649
Other comprehensive loss		—		—		—			—			567			—			567
Net loss		—		—		—			—			—			(14,573	)		(14,573	)
Balance as of April 30, 2021		162,762	$	16	$	1,462,038		$	(1,177	)	$	(371	)	$	(1,335,693	)	$	124,813

	Three Months Ended April 30, 2020
	Class A Common Stock				Additional Paid-In		Treasury			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Capital		Stock			Loss			Deficit			Equity
Balance as of January 31, 2020		150,611	$	15	$	1,302,072	$	(1,177	)	$	(307	)	$	(1,278,246	)	$	22,357
Issuance of common stock under    employee equity plans, net of shares    withheld for employee payroll taxes		2,835		—		2,607		—			—			—			2,607
Stock-based compensation related to    stock awards		—		—		42,766		—			—			—			42,766
Other comprehensive loss		—		—		—		—			(1,332	)		—			(1,332	)
Net loss		—		—		—		—			—			(25,550	)		(25,550	)
Balance as of April 30, 2020		153,446	$	15	$	1,347,445	$	(1,177	)	$	(1,639	)	$	(1,303,796	)	$	40,848

See notes to condensed consolidated financial statements.

8

BOX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended
	April 30,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(14,573	)	$	(25,550	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		19,380			17,946
Stock-based compensation expense		41,790			40,043
Amortization of deferred commissions		10,517			8,159
Other		443			74
Changes in operating assets and liabilities:
Accounts receivable, net		116,835			110,367
Deferred commissions		(7,927	)		(7,695	)
Operating lease right-of-use assets, net		10,852			9,713
Prepaid expenses and other assets		(8,816	)		(4,925	)
Accounts payable, accrued expenses and other liabilities		(11,906	)		(19,713	)
Operating lease liabilities		(13,927	)		(11,002	)
Deferred revenue		(47,896	)		(55,500	)
Net cash provided by operating activities		94,772			61,917
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term investment		(50,000	)		—
Purchases of property and equipment, net of proceeds from sales		(1,145	)		(1,407	)
Capitalized internal-use software costs		(1,178	)		(3,291	)
Acquisitions, net of cash acquired		(56,642	)		—
Proceeds from the sale of a strategic equity investment		—			107
Net cash used in investing activities		(108,965	)		(4,591	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Convertible debt issuance costs		(471	)		—
Proceeds from borrowings, net of borrowing costs		—			30,000
Proceeds from exercise of stock options		1,356			965
Proceeds from issuances of common stock under employee stock purchase plan		12,510			11,906
Employee payroll taxes paid related to net share settlement of restricted stock units		(15,684	)		(10,212	)
Principal payments of finance lease liabilities		(13,262	)		(17,356	)
Capitalized internal-use software costs		(3,297	)		—
Net cash (used in) provided by financing activities		(18,848	)		15,303
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(211	)		200
Net (decrease) increase in cash, cash equivalents, and restricted cash		(33,252	)		72,829
Cash, cash equivalents, and restricted cash, beginning of period		595,511			195,586
Cash, cash equivalents, and restricted cash, end of period	$	562,259		$	268,415
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Increase in finance lease liabilities	$	1,107		$	14,825
Stock consideration in connection with fiscal 2022 acquisition		10,000			—
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH INFORMATION:
Cash and cash equivalents, beginning of period	$	595,082		$	195,586
Restricted cash, beginning of period		429			—
Cash, cash equivalents, and restricted cash, beginning of period	$	595,511		$	195,586
Cash and cash equivalents, end of period	$	561,459		$	267,973
Restricted cash, end of period		800			442
Cash, cash equivalents, and restricted cash, end of period	$	562,259		$	268,415

See notes to condensed consolidated financial statements.

9

BOX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Description of Business and Basis of Presentation

Description of Business

We were incorporated in the state of Washington in April 2005, and were reincorporated in the state of Delaware in March 2008. We changed our name from Box.Net, Inc. to Box, Inc. in November 2011. Box provides a leading cloud content management platform that enables organizations of all sizes to securely manage cloud content while allowing easy, secure access and sharing of this content from anywhere, on any device.

Basis of Presentation

The accompanying condensed consolidated balance sheet as of April 30, 2021 and the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive loss, the condensed consolidated statements of stockholders’ equity, and the condensed consolidated statements of cash flows for the three months ended April 30, 2021 and 2020, respectively, are unaudited. The condensed consolidated balance sheet data as of January 31, 2021 was derived from the audited consolidated financial statements that are included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2021 (the Form 10-K), which was filed with the Securities and Exchange Commission (the SEC) on March 19, 2021. The accompanying statements should be read in conjunction with the audited consolidated financial statements and related notes contained in our Form 10-K. Other than items discussed under Use of Estimates and Recently Adopted Accounting Pronouncements, there have been no other material changes to our critical accounting policies and estimates during the three months ended April 30, 2021 from those disclosed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K.

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information. Accordingly, they do not include all of the financial information and footnotes required by GAAP for complete financial statements. In the opinion of our management, the unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements in the Form 10-K and include all adjustments necessary for the fair presentation of our balance sheet as of April 30, 2021, and our results of operations, including our comprehensive loss, our stockholders’ equity, and our cash flows for the three months ended April 30, 2021 and 2020. All adjustments are of a normal recurring nature. The results for the three months ended April 30, 2021 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending January 31, 2022.

Certain prior period amounts reported in our condensed consolidated financial statements and notes thereto have been reclassified to conform to the current year presentation. Such reclassifications did not affect total revenues, operating income, or net income.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make, on an ongoing basis, estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ from these estimates. Such estimates include, but are not limited to, the determination of the allowance for accounts receivable, fair value of acquired intangible assets and goodwill, useful lives of acquired intangible assets and property and equipment, timing and costs associated with our asset retirement obligations, the nature and timing of satisfaction of performance obligations, estimate of standalone selling price allocation included in contracts with multiple performance obligations, the estimated expected benefit period for deferred commissions, the estimated useful life of capitalized internal-use software costs, observable price changes of non-marketable equity securities, fair value of derivative instruments, the incremental borrowing rate we use to determine our lease liabilities, fair values of stock-based awards, legal contingencies, the valuation of deferred income tax assets, and unrecognized tax benefits, among others. Management bases its estimates on historical experience and on various other assumptions which management believes to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.   

Certain Risks and Concentrations

Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments, and accounts receivable. Although we deposit our cash with multiple financial institutions, our deposits, at times, may exceed deposit insurance coverage limits.

10

BOX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

We sell to a broad range of customers. Our revenue is derived primarily from the United States across a multitude of industries. Accounts receivable are derived from the delivery of our services to customers primarily located in the United States. We accept and settle our accounts receivable using credit cards, electronic payments and checks. A majority of our lower dollar value invoices are settled by credit card on or near the date of the invoice. We do not require collateral from customers to secure accounts receivable. We maintain an allowance for doubtful accounts based upon the expected collectability, which takes into consideration specific customer creditworthiness and current economic trends. We believe collections of our accounts receivable are probable based on the size, industry diversification, financial condition and past transaction history of our customers. As of April 30, 2021 and January 31, 2021, one reseller, which is also a customer, accounted for more than 10% of total accounts receivable. No single customer represented over 10% of our revenue for the three months ended April 30, 2021 and 2020.

We serve our customers and users from data center facilities operated by third parties. In order to reduce the risk of down time of our subscription services, we have established data centers and third-party cloud computing and hosting providers in various locations in the United States and abroad. We have internal procedures to restore services in the event of disaster at any one of our current data center facilities. Even with these procedures for disaster recovery in place, our cloud services could be significantly interrupted during the implementation of the procedures to restore services.

Geographic Locations

For the three months ended April 30, 2021 and 2020, revenue attributable to customers in the United States was 69% and 73%, respectively. For the three months ended April 30, 2021 and 2020, revenue attributable to customers in Japan was 17% and 13%, respectively.

Substantially all of our net assets are located in the United States. As of April 30, 2021 and January 31, 2021, property and equipment located in the United States was approximately 96%.

Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (FASB) issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and by improving consistent application of other areas of Topic 740. We adopted the new standard, effective February 1, 2021, and the adoption did not have a material impact on our consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06 (ASU 2020-06), Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). The amendments in this update were implemented by the FASB to reduce the number of accounting models for convertible debt instruments. Under ASU 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument is accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. There is no longer a debt discount representing the difference between the carrying value, excluding issuance costs, and the principal of the convertible debt instrument and, as a result, there is no longer interest expense from the amortization of the debt discount over the term of the convertible debt instrument. The amendments in this update also require the if-converted method to be applied for all convertible instruments when calculating diluted earnings per share. We early adopted the new standard, effective February 1, 2021, using the modified retrospective method. The comparative periods presented and disclosed in the year of adoption are based on legacy guidance.

Adoption Impact of ASU 2020-06 on the Opening Balance Sheet as of February 1, 2021

In connection with the adoption of ASU 2020-06, we recognized a $0.6 million decrease of accumulated deficit, a $68.6 million decrease of additional paid-in capital, and a $68.0 million increase of debt, net, noncurrent. The adoption of ASU 2020-06 did not have a material effect on our condensed consolidated statements of operations and cash flows.

Recently Issued Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. Reference rate reform refers to the global transition away from certain reference rates, such as the London Interbank Offered Rate (LIBOR), and to the introduction of new reference rates that are based on a larger and more liquid

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BOX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

population of observable transactions. ASU 2020-04 provides temporary optional expedients and exceptions for applying GAAP to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued as a result of reference rate reform. The amendments in this ASU were effective upon issuance do not have a material impact on our condensed consolidated financial statements.

Summary of Significant Accounting Policies

Other than items discussed under Use of Estimates and Recently Adopted Accounting Pronouncements, there have been no material changes to our critical accounting policies during the three months ended April 30, 2021 from those disclosed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K for the fiscal year ended January 31, 2021.

Note 2. Revenue

Contract Assets

Contract assets, which are presented within accounts receivable, were not material as of April 30, 2021 and January 31, 2021.

Deferred Revenue

Deferred revenue was $423.2 million and $465.6 million as of April 30, 2021 and January 31, 2021, respectively. During the three months ended April 30, 2021 and 2020, we recognized $167.4 million and $154.4 million of revenue that was included in the deferred revenue balance as of January 31, 2021 and 2020, respectively.

Transaction Price Allocated to the Remaining Performance Obligations

As of April 30, 2021, we had remaining performance obligations for subscription contracts of $864.8 million. We expect to recognize revenue on 62% of these remaining performance obligations over the next 12 months, with the substantial majority of the remaining balance expected to be recognized within 24 months.

Note 3. Fair Value Measurements

We measure our financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. We define fair value as the exchange price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:

• Level 1—Observable inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

• Level 2—Observable inputs are quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices which are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments.

• Level 3—Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. These inputs are based on our own assumptions used to measure assets and liabilities at fair value and require significant management judgment or estimation.

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BOX, INC.

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(Unaudited)

Investments

Financial assets subject to the fair value disclosure requirements were as follows (in thousands):    

	April 30, 2021
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	324,926	$	—	$	—	$	324,926
	January 31, 2021
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	256,861	$	—	$	—	$	256,861

As of April 30, 2021, we had certificates of deposit of $50 million with a maturity of twelve months, which is classified as short-term investments in our condensed consolidated balance sheet.

Fair Value Measurements of Other Financial Instruments

In November 2017, we entered into a secured credit agreement (as amended or otherwise modified from time to time, the “November 2017 Facility”). As of April 30, 2021 and January 31, 2021, we had total debt outstanding relating to the November 2017 Facility with a carrying amount of $30.0 million. The estimated fair value of the November 2017 Facility, which we have classified as a Level 2 financial instrument, approximates its carrying value.

In January 2021, we issued $345.0 million aggregate principal amount of 0.00% convertible senior notes due January 15, 2026 (Notes). The fair value of the Notes is determined using observable market prices. The fair value of the Notes, which we have classified as a Level 2 instrument, was $375.3 million and $348.4 million as of April 30, 2021 and January 31, 2021, respectively.

Note 4. Balance Sheet Components

Allowance for Doubtful Accounts

Allowance for doubtful accounts, which is presented within accounts receivable, was $3.0 million and $2.7 million as of April 30, 2021 and January 31, 2021, respectively.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):

	April 30,		January 31,
	2021		2021
Prepaid expenses	$	21,551	$	11,672
Capitalized qualifying implementation costs incurred in a hosting arrangement that is a service contract, net of amortization (1)		1,802		1,672
Other current assets		3,018		3,441
Total prepaid expenses and other current assets	$	26,371	$	16,785

(1) Capitalized stock-based compensation expense, which is included in these amounts, was not material for the periods presented. The accumulated amortization of the capitalized costs was $1.6 million and $1.4 million as of April 30, 2021 and January 31, 2021, respectively. Amortization expense related to capitalized costs was not material for the three months ended April 30, 2021 and 2020. We have not recorded any material impairment charges during the periods presented.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

	April 30,			January 31,
	2021			2021
Servers and related equipment	$	354,999		$	352,224
Leasehold improvements		78,289			80,558
Computer hardware		21,689			25,810
Furniture and fixtures		13,998			14,157
Construction in progress		9,955			11,422
Total property and equipment		478,930			484,171
Less: accumulated depreciation		(332,830	)		(324,023	)
Total property and equipment, net	$	146,100		$	160,148

As of April 30, 2021, the gross carrying amount of property and equipment included $258.6 million of servers and related equipment and $5.6 million of construction in progress acquired under finance leases, and the accumulated depreciation of property and equipment acquired under these finance leases was $165.5 million. As of January 31, 2021, the gross carrying amount of property and equipment included $256.0 million of servers and related equipment and $7.1 million of construction in progress acquired under finance leases, and the accumulated depreciation of property and equipment acquired under these finance leases was $152.5 million.

Depreciation expense related to property and equipment was $16.2 million and $16.4 million for the three months ended April 30, 2021 and 2020, respectively. Included in these amounts were depreciation expense for servers and related equipment acquired under finance leases in the amount of $13.1 million, for the same periods respectively. Construction in progress primarily consists of servers and networking equipment and storage infrastructure being provisioned in our data center facilities. Interest capitalized to property and equipment was not material for the periods presented.

Operating Lease Right-of-Use Assets, Net

Operating lease right-of-use assets, net consisted of the following (in thousands):

	April 30,			January 31,
	2021			2021
Operating lease right-of-use assets	$	270,331		$	270,428
Less: accumulated amortization		(86,930	)		(76,175	)
Operating lease right-of-use assets, net	$	183,401		$	194,253

Other Long-term Assets

Other long-term assets consisted of the following (in thousands):

	April 30,		January 31,
	2021		2021
Acquired intangible assets, net of amortization	$	19,781	$	—
Internally developed software costs, net of amortization (1) (2)		16,007		16,071
On-premises software, net of amortization (2) (3)		8,290		8,749
Other assets, noncurrent		5,390		5,247
Deposits, noncurrent		2,481		2,707
Other long-term assets	$	51,949	$	32,774

(1) Capitalized stock-based compensation expense, which is included in these amounts, was $5.9 million and $5.8 million as April 30, 2021 and January 31, 2021, respectively.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

(2) The accumulated amortization of capitalized software costs in the aggregate was $14.1 million and $11.2 million as of April 30, 2021 and January 31, 2021, respectively. Amortization expense related to capitalized software was $3.0 million and $1.9 million for the three months ended April 30, 2021 and 2020, respectively. We have not recorded any material impairment charges during the periods presented.

(3) The estimated useful lives of on-premises software range from three to four years.

Note 5. Leases

We have entered into various non-cancellable operating lease agreements for certain of our offices and data centers with lease periods expiring primarily between fiscal years 2022 and 2029. Certain of these arrangements have free or escalating rent payment provisions and optional renewal or termination clauses. Our operating leases typically include variable lease payments, which are primarily comprised of common area maintenance and utility charges for our offices and power and network connections for our data centers, that are determined based on actual consumption. Our operating lease agreements do not contain any residual value guarantees, covenants, or other restrictions.  

We have also entered into various finance lease arrangements to obtain servers and related equipment for our data center operations. These agreements are primarily for four years and certain of these arrangements have optional renewal or termination clauses. The leases are secured by the underlying leased servers and related equipment.

We sublease certain floors of our Redwood City, San Francisco, and London offices. Our current subleases have total lease terms ranging from 11 to 96 months that will expire at various dates by fiscal year 2025.

The components of lease cost, which were included in operating expenses in our condensed consolidated statements of operations, were as follows (in thousands):

	Three Months Ended
	April 30,
	2021			2020
Finance lease cost:
Amortization of finance lease right-of-use assets	$	13,082		$	13,106
Interest on finance lease liabilities		1,171			1,526
Operating lease cost, gross		13,780			13,117
Variable lease cost, gross		2,302			2,724
Sublease income		(3,194	)		(2,808	)
Total lease cost (1)	$	27,141		$	27,665

(1) Short-term lease cost was not material for the periods presented and is not included in the table above.

As of April 30, 2021, maturities of our operating and finance lease liabilities, which do not include short-term leases and variable lease payments, are as follows (in thousands):

Years ending January 31:	Operating Leases (1)			Finance Leases
Remainder of 2022	$	41,742		$	38,898
2023		49,593			42,041
2024		48,126			19,584
2025		32,476			1,573
2026		28,391			—
Thereafter		63,616			—
Total lease payments	$	263,944		$	102,096
Less: imputed interest	$	(37,715	)	$	(5,109	)
Present value of total lease liabilities	$	226,229		$	96,987

(1) Non-cancellable sublease proceeds for the remainder of the fiscal year ending January 31, 2022 and the fiscal years ending January 31, 2023, 2024, and 2025 of $6.6 million, $8.8 million, $2.3 million, and $2.1 million, respectively, are not included in the table above.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

We establish assets and liabilities for the present value of estimated future costs to return certain of our leased facilities to their original condition. Such assets are depreciated over the lease period into operating expense, and the recorded liabilities are accreted to the future value of the estimated restoration costs. The present value of our estimated asset retirement obligation for our headquarters facility, which is recorded in other long-term liabilities, was $3.1 million as of April 30, 2021 and January 31, 2021. The accretion expense, which was included in operating expenses in our condensed consolidated statements of operations, was not material for all periods presented.

Note 6. Acquisitions

The purchase price allocation is preliminary. The Company continues to collect information with regard to its estimates and assumptions, including potential liabilities and contingencies. The Company will record adjustments to the fair value of the net assets acquired and goodwill within the twelve months measurement period, if necessary.

SignRequest B.V.

On February 8, 2021, we completed the acquisition of SignRequest B.V. (SignRequest), an e-signature provider, for total aggregate consideration of $54.3 million comprised of a combination of cash and shares of our Class A common stock. Box acquired SignRequest to develop Box Sign, an e-signature capability that will be developed on Sign-Request’s technology and natively integrated into Box.

The consideration paid was $44.3 million of cash and 550,366 shares of our Class A common stock valued at $10.0 million.

Under the acquisition method of accounting, the total final purchase price was allocated to SignRequest’s net tangible and intangible assets based upon their estimated fair values as of the acquisition date. The excess purchase price over the value of the net tangible and identifiable intangible assets was recorded as goodwill. Of the total purchase price, $43.4 million was allocated to goodwill, $14.9 million to the acquired developed technology, $2.5 million to deferred tax liability and the remainder to net liabilities assumed which were not material. The goodwill recognized was primarily attributed to increased synergies that are expected to be achieved from the integration of the acquired developed technology into the Box service. Goodwill is non-deductible for tax purposes.

Cloud FastPath

On February 16, 2021, we purchased certain assets and assumed certain liabilities of, and hired certain employees from, Cloud FastPath, a cloud-based content migration solution, for total consideration of $14.8 million paid in cash. We entered into this agreement with Cloud FastPath to supplement and enhance Box Shuttle, our full-service content migration program.

The fair value of the consideration transferred on the date of purchase totaled $14.8 million, which consisted of cash consideration of $12.4 million and $2.4 million which has been held back for fifteen months from the date of purchase to secure the indemnification obligations of the Seller.

Under the acquisition method of accounting, the total final purchase price was allocated to Cloud FastPath’s net tangible and intangible assets based on their estimated fair values as of the date of purchase. The excess purchase price over the value of the net tangible and identifiable intangible assets was recorded as goodwill. Of the total purchase price, $13.2 million was allocated to goodwill, $5.8 million to the acquired developed technology, $4.8 million to deferred revenue and the remainder to net assets assumed which were not material. The goodwill recognized was primarily attributed to increased synergies that are expected to be achieved from the integration of the acquired developed technology into the Box service. Goodwill is deductible for tax purposes.

Results of operations for these acquisitions have been included in our condensed consolidated statements of operations since the acquisition dates and were not material. Pro forma results of operations for these acquisitions have not been presented because they were also not material to the consolidated results of operations.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 7. Goodwill and Acquired Intangible Assets

Goodwill activity for the three months ended April 30, 2021 is reflected in the following table (in thousands):

Balance as of January 31, 2021	$	18,740
Goodwill acquired - SignRequest		43,386
Goodwill acquired - Cloud FastPath		13,230
Foreign currency translation		241
Balance as of April 30, 2021	$	75,597

We did not record any goodwill impairment during the three months ended April 30, 2021. There were no additions or impairment to goodwill during the three months ended April 30, 2020.

Acquired intangible assets consisted of the following (in thousands):

	Weighted-Average Remaining Useful Life (Years)		Gross Value		Accumulated Amortization			Net Carrying Value
Balance as of January 31, 2021			$	—	$	—		$	—
Developed technology		4.22		20,682		(901	)		19,781
Balance as of April 30, 2021			$	20,682	$	(901	)	$	19,781

Acquired intangible assets are amortized on a straight-line basis over the useful life. Acquired intangible assets amortization was $0.9 million for the three months ended April 30, 2021. We did not record any acquired intangible assets amortization during the three months ended April 30, 2020. Amortization of acquired developed technology is included in cost of revenue in the condensed consolidated statements of operations.

As of April 30, 2021, expected amortization expense for acquired intangible assets was as follows (in thousands):

Fiscal years ending January 31:
Remainder of 2022	$	3,860
2023		4,912
2024		4,912
2025		3,064
2026		2,976
Thereafter		57
Total	$	19,781

Note 8. Commitments and Contingencies

Letters of Credit

As of April 30, 2021 and January 31, 2021, we had letters of credit in the aggregate amount of $27.0 million in connection with our operating leases and voluntary disability insurance (VDI) program, which were primarily issued under the available sublimit for the issuance of letters of credit in conjunction with a secured credit agreement as disclosed in Note 9.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Purchase Obligations

As of April 30, 2021, future payments under non-cancellable contractual purchases, which were not recognized on our condensed consolidated balance sheet and relate primarily to infrastructure services and IT software and support services costs, are as follows, shown in accordance with the payment due date (in thousands):

Fiscal years ending January 31:
Remainder of 2022	$	7,363
2023		38,104
2024		4,860
2025		434
2026		211,234
Thereafter		—
	$	261,995

Our contracts for infrastructure services and IT software, which have terms ranging from 2 to 8 years, support our long-term goals of improving gross margin. In addition to the purchase obligations included above, as of April 30, 2021, we recognized a total of $9.2 million related to non-cancellable contractual purchases, which were included in accounts payable, accrued expenses and other current liabilities, and other long-term liabilities on the condensed consolidated balance sheet. $3.5 million, $3.8 million, and $1.9 million is due to be paid in the remainder of the fiscal year ending January 31, 2022 and the fiscal years ending January 31, 2023 and 2024, respectively.

Legal Matters

From time to time, we are subject to claims that arise in the ordinary course of business, including matters we initiate to defend ourselves or our users by determining the scope, enforceability, and validity of third-party proprietary rights or to establish our proprietary rights. We investigate these claims as they arise and accrue estimates for resolution of legal and other contingencies when losses are probable and estimable. Although the results of litigation and claims cannot be predicted with certainty, we believe there was not at least a reasonable possibility that we had incurred a material loss with respect to such loss contingencies as of April 30, 2021. Additionally, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors, regardless of the outcome of such litigation.

Indemnification

We include service level commitments to our customers warranting certain levels of uptime reliability and performance and permitting those customers to receive credits in the event that we fail to meet those levels. In addition, our customer contracts often include (i) specific obligations that we maintain the availability of the customer’s data through our service and that we secure customer content against unauthorized access or loss, and (ii) indemnity provisions whereby we indemnify our customers for third-party claims asserted against them that result from our failure to maintain the availability of their content or securing the same from unauthorized access or loss. To date, we have not incurred any material costs as a result of such commitments.

Our arrangements generally include certain provisions for indemnifying customers against liabilities if our products or services infringe a third party’s intellectual property rights. It is not possible to determine the maximum potential amount under these indemnification obligations due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. To date, we have not incurred any material costs as a result of such obligations and have not accrued any material liabilities related to such obligations in the condensed consolidated financial statements. In addition, we indemnify our officers, directors and certain key employees while they are serving in good faith in their respective capacities. To date, there have been no claims under any indemnification provisions.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 9. Debt

Convertible Senior Notes

In January 2021, we issued $345.0 million aggregate principal amount of 0.00% convertible senior notes due January 15, 2026. The Notes are senior unsecured obligations and do not bear regular interest. Each $1,000 principal amount of the Notes will initially be convertible into 38.7665 shares of our Class A common stock, which is equivalent to an initial conversion price of approximately $25.80 per share, subject to adjustment upon the occurrence of specified events.

The Notes are convertible at the option of the holders of the Notes at any time prior to the close of business on the business day immediately preceding October 15, 2025, only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on April 30, 2021 (and only during such fiscal quarter), if the last reported sale price of our Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five-business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Class A common stock and the conversion rate for the Notes on each such trading day; (3) if we call the Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events.

On or after October 15, 2025, holders of the Notes may convert all or any portion of their Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions. Effective February 5, 2021, we have made an irrevocable election to settle the principal portion of the Notes only in cash. Accordingly, upon conversion, we will pay the principal portion 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 the Company’s election.

We may not redeem the Notes prior to January 20, 2024. We may redeem for cash all or any portion of the Notes, at our option, on or after January 20, 2024, if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus any accrued and unpaid special interest to, but excluding the redemption date.

Upon the occurrence of a fundamental change (as defined in the indenture governing the Notes) prior to the maturity date, subject to certain conditions, holders of the Notes may require us to repurchase all or a portion of the Notes for cash at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid special interest to, but excluding, the fundamental change repurchase date.

As of April 30, 2021, the conditions allowing holders of the Notes to convert were not met.

The net carrying amount of the Notes consists of the following (in thousands):

	April 30,			January 31,
	2021			2021
Principal	$	345,000		$	345,000
Unamortized debt discount for conversion option		—			(69,916	)
Unamortized issuance costs		(8,939	)		(7,470	)
Net carrying amount	$	336,061		$	267,614

Issuance costs are being amortized to interest expense over the term of the Notes using the effective interest rate method. The effective interest rate used to amortize the issuance costs was 0.56%. For the three months ended April 30, 2021, the interest expense recognized related to the Notes was $0.5 million.

Capped Calls

In connection with the pricing of the Notes, we entered into privately negotiated capped call transactions with certain counterparties (Capped Calls). The Capped Calls each have an initial strike price of approximately $25.80 per share, subject to certain adjustments, which correspond to the initial conversion price of the Notes. The Capped Calls have initial cap prices of $35.58 per share, subject to certain adjustments. The Capped Calls cover, subject to anti-dilution adjustments, approximately 13.4 million shares

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(Unaudited)

of our Class A common stock. Conditions that cause adjustments to the initial strike price of the Capped Calls are similar to the conditions that result in corresponding adjustments for the Notes. The Capped Calls are generally intended to reduce or offset the potential dilution to our common stock upon any conversion of the Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. The Capped Calls are separate transactions, and not part of the terms of the Notes. As these transactions meet certain accounting criteria, the Capped Calls are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of $27.8 million incurred in connection with the Capped Calls was recorded as a reduction to additional paid-in capital.

Line of Credit

On November 27, 2017, we entered into a secured credit agreement (as amended or otherwise modified from time to time, the November 2017 Facility). The maturity date of borrowings under the November 2017 Facility is July 12, 2022, the revolving commitment is $100.0 million, and it provides for a sublimit for the issuance of letters of credit of $45.0 million. The November 2017 Facility limits the amount of finance leases and debt that we can incur to $200.0 million, and allows for the issuance of debt constituting convertible debt securities of $350.0 million so long as the total leverage ratio does not exceed 6.00 to 1.00. The revolving loans accrue interest at a prime rate plus a margin of 0.25% or, at our option, a LIBOR rate (based on one, three or six-month interest periods) plus a margin of 1.00%. Borrowings under the November 2017 Facility are collateralized by substantially all of our assets. The November 2017 Facility requires us to comply with a maximum leverage ratio and a minimum liquidity requirement.  Additionally, the November 2017 Facility contains customary affirmative and negative covenants.

As of April 30, 2021, we had total debt outstanding with a carrying amount of $30.0 million and we were in compliance with all financial covenants.

Derivative Instruments and Hedging

In association with our November 2017 Facility, we are required to make variable rate interest payments based on a contractually specified interest rate index (e.g., LIBOR). The variable rate interest payments create interest rate risk as interest payments will fluctuate based on changes in the contractually specified interest rate index over the life of the loan. To minimize our risk exposure due to the volatility of the interest rate index, we entered into an interest rate swap agreement with Wells Fargo Bank, National Association, effective as of September 5, 2019 (Swap Agreement). This agreement, which is designated as a cash flow hedge, has a maturity of five years. Under the Swap Agreement, we have hedged a portion of the variable interest payments by effectively fixing our interest payments over the term of the agreement. As of April 30, 2021, our interest rate swap had a notional value of $30.0 million.

Note 10. Stock-Based Compensation

Employee Equity Plans

In January 2015, our board of directors adopted the 2015 Equity Incentive Plan (2015 Plan), which became effective prior to the completion of our initial public offering (IPO). Awards granted under the 2015 Plan may be (i) incentive stock options, (ii) nonstatutory stock options, (iii) restricted stock units, (iv) restricted stock awards or (v) stock appreciation rights, as determined by our board of directors at the time of grant. Generally, our restricted stock units vest over four years and, (a) for employee new hire restricted stock unit grants, twenty-five percent vest one year from the vesting commencement date and continue to vest 1/16th per quarter thereafter; or (b) for employee refresh restricted stock unit grants, 1/16th per quarter vest from the vesting commencement date. As of April 30, 2021, 26,683,430 shares were reserved for future issuance under the 2015 Plan.

In January 2015, our board of directors adopted the 2015 Employee Stock Purchase Plan (2015 ESPP), which became effective prior to the completion of our IPO. The 2015 ESPP allows eligible employees to purchase shares of our Class A common stock at a discount of up to 15% through payroll deductions of their eligible compensation, subject to any plan limitations. The 2015 ESPP provides for 24-month offering periods beginning March 16 and September 16 of each year, and each offering period consists of four six-month purchase periods.

On each purchase date, eligible employees may purchase our stock at a price per share equal to 85% of the lesser of (1) the fair market value of our stock on the offering date or (2) the fair market value of our stock on the purchase date. In the event the price is lower on the last day of any purchase price period, in addition to using that price as the basis for that purchase period, the offering period resets and the new lower price becomes the new offering price for a new 24 month offering period. As of April 30, 2021, 1,356,993 shares were reserved for future issuance under the 2015 ESPP.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Stock Options

The following table summarizes the stock option activity under the equity incentive plans and related information:

	Shares Subject to Options Outstanding					Weighted- Average
				Weighted-		Remaining
				Average Exercise		Contractual Life		Aggregate
	Shares			Price		(Years)		Intrinsic Value
								(in thousands)
Balance as of January 31, 2021		6,617,037		$	10.77		3.77	$	48,098
Options granted		—			—
Options exercised		(175,460	)		7.73
Options forfeited/cancelled		—			—
Balance as of April 30, 2021		6,441,577		$	10.85		3.55	$	67,482
Vested and expected to vest as of April 30, 2021		6,381,107		$	10.76		3.52	$	67,406
Exercisable as of April 30, 2021		5,224,876		$	8.71		2.66	$	65,940

The aggregate intrinsic value of options vested and expected to vest and exercisable as of April 30, 2021 is calculated based on the difference between the exercise price and the current fair value of our common stock. The aggregate intrinsic value of exercised options for the three months ended April 30, 2021 and 2020 was $2.5 million and $2.2 million, respectively. The aggregate estimated fair value of stock options granted to employees that vested during the three months ended April 30, 2021 and 2020 was $0.4 million and $0.5 million, respectively. There were no options granted to employees during the three months ended April 30, 2021. The weighted-average grant date fair value of options granted to employees during the three months ended April 30, 2020 was $5.41 per share.

As of April 30, 2021, there was $1.2 million of unrecognized stock-based compensation expense related to outstanding stock options granted to employees that is expected to be recognized over a weighted-average period of 1.38 years.

Stock Options with Market-Based Performance Goals

To further align our stockholders’ interests with executive officers’ interests, the Compensation Committee of our board of directors approved and granted performance-based stock options with market-based performance goals under the 2015 Plan to certain executive officers, which are subject to both the achievement of the market-based performance goal established by the Compensation Committee and the continued employment of the participant. These performance-based stock options were awarded during our fiscal years ending January 31, 2018, 2019, and 2020, and vest only to the extent that both the market-based performance goal and time-based condition are satisfied. As of April 30, 2021, the total outstanding balance of performance-based stock options was 1,375,000.

The grant date fair value of these awards was determined using a Monte Carlo valuation model and the related stock-based compensation expense is recognized based on an accelerated attribution method. Of the total $1.2 million in unrecognized stock-based compensation expense for stock options as of April 30, 2021, $0.7 million related to outstanding performance-based stock options with market-based performance goals, which is expected to be recognized over a weighted-average period of 1.67 years.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Restricted Stock Units

The following table summarizes the restricted stock unit activity under the equity incentive plans and related information:

	Number of			Weighted-
	Restricted			Average
	Stock Units			Grant Date
	Outstanding			Fair Value
Unvested balance - January 31, 2021		14,330,678		$	17.68
Granted		7,003,448			23.65
Vested, net of shares withheld for employee payroll taxes		(1,206,102	)		19.75
Forfeited/cancelled, including shares withheld for employee payroll taxes		(1,915,467	)		18.46
Unvested balance - April 30, 2021		18,212,557		$	19.75

As of April 30, 2021, there was $339.3 million of unrecognized stock-based compensation expense related to outstanding restricted stock units granted to employees that is expected to be recognized over a weighted-average period of 2.98 years.

Performance-Based Restricted Stock Units

We use performance-based incentives for certain employees, including our named executive officers, to achieve our annual financial and operational objectives, while making progress towards our longer-term strategic and growth goals. Typically, near the beginning of each fiscal year, our Compensation Committee adopts the performance criteria and targets for the incentive compensation plan for that fiscal year, which identifies the plan participants, the performance measures and the associated target levels for each measure, and the potential payouts based on actual performance for the fiscal year. 

In the first quarter of fiscal year 2021, our Compensation Committee adopted and approved the performance criteria and targets for fiscal year 2021 under our omnibus Executive Incentive Plan (the Fiscal 2021 Executive Bonus Plan). Based on a review of our actual achievement of pre-established corporate financial objectives and additional inputs from our Compensation Committee, the Fiscal 2021 Executive Bonus Plan was determined, settled and paid out in the first quarter of fiscal year 2022 in the form of fully vested restricted stock units. During the first quarter of fiscal year 2022, we recognized stock-based compensation expense related to the Fiscal 2021 Executive Bonus Plan in the amount of $3.2 million.

In the first quarter of fiscal year 2022, our Compensation Committee adopted and approved the performance criteria and targets for fiscal year 2022 under our omnibus Executive Plan (the Fiscal 2022 Executive Bonus Plan). The Fiscal 2022 Executive Bonus Plan provides opportunities for 100% equity incentive compensation payouts based on our actual achievement of pre-established corporate financial objectives, subject to review and a final approval by our Compensation Committee. During the three months ended April 30, 2021, we recognized stock-based compensation expense related to the Fiscal 2022 Executive Bonus Plan in the amount of $2.6 million. The unrecognized compensation expense related to the ungranted and unvested Fiscal 2022 Executive Bonus Plan is $9.0 million, based on the expected performance against the pre-established corporate financial objectives as of April 30, 2021, which is expected to be recognized over a remaining weighted-average period of less than one year. The payouts of the Fiscal 2022 Executive Bonus Plan are expected to be made in the form of fully vested restricted stock units in the first quarter of fiscal year 2023.

2015 ESPP

As of April 30, 2021, there was $25.4 million of unrecognized stock-based compensation expense related to the 2015 ESPP that is expected to be recognized over the remaining term of the respective offering periods.

22

BOX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Stock-Based Compensation

The following table summarizes the components of stock-based compensation expense recognized in the condensed consolidated statements of operations (in thousands):

	Three Months Ended
	April 30,
	2021		2020
Cost of revenue	$	5,340	$	4,541
Research and development		15,453		17,287
Sales and marketing		11,551		10,079
General and administrative		9,446		8,136
Total stock-based compensation	$	41,790	$	40,043

Determination of Fair Value

We estimated the fair value of employee stock options and 2015 ESPP purchase rights using a Black-Scholes option pricing model with the following assumptions.

	Three Months Ended
	April 30,
	2021					2020
Employee Stock Options
Expected term (in years)				N/A						5.8
Risk-free interest rate				N/A						0.6	%
Volatility				N/A						46	%
Dividend yield				N/A						0	%
Employee Stock Purchase Plan
Expected term (in years)		0.5	-		2.0		0.5		-	2.0
Risk-free interest rate	0.1%		-	0.2%			0.3	%	-	0.4	%
Volatility	42%		-	52%			44	%	-	52	%
Dividend yield				0%						0	%

The assumptions used in the Black-Scholes option pricing model were determined as follows:

Fair Value of Common Stock. We use the market closing price for our Class A common stock as reported on the New York Stock Exchange to determine the fair value of our common stock at each grant date.

Expected Term. The expected term represents the period that our share-based awards are expected to be outstanding. The expected term assumptions were determined based on the vesting terms, exercise terms and contractual lives of the options and 2015 ESPP purchase rights.

Expected Volatility. We estimate the expected volatility of the stock option grants and 2015 ESPP purchase rights based on the historical volatility of our Class A common stock over a period equivalent to the expected term of the stock option grants and 2015 ESPP purchase rights, respectively.

Risk-free Interest Rate. The risk-free rate that we use is based on the implied yield available on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options and 2015 ESPP purchase rights.

Dividend Yield. We have never declared or paid any cash dividends and do not plan to pay cash dividends in the foreseeable future, and, therefore, use an expected dividend yield of zero.

23

BOX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 11. Net Loss per Share

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share amounts):

	Three Months Ended April 30,
	2021			2020
Numerator:
Net loss	$	(14,573	)	$	(25,550	)
Denominator:
Weighted-average number of shares outstanding—basic and diluted		161,733			151,943
Net loss per share—basic and diluted	$	(0.09	)	$	(0.17	)

The following weighted-average outstanding shares of common stock equivalents were excluded from the computation of diluted net loss per share for the periods presented because the impact of including them would have been antidilutive (in thousands):

	Three Months Ended April 30,
	2021		2020
Options to purchase common stock		5,369		5,624
Restricted stock units		15,471		16,863
Employee stock purchase plan		1,743		2,678
Shares related to the convertible senior notes		601		—
Total		23,184		25,165

Note 12. Income Taxes

We evaluate tax positions for recognition using a more-likely-than-not recognition threshold, and those tax positions eligible for recognition are measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon the effective settlement with a taxing authority that has full knowledge of all relevant information. We believe that we have provided adequate reserves for our income tax uncertainties in all open tax years.

We file tax returns in the U.S. for federal, California, and other states. All tax years remain open to examination for both federal and state purposes as a result of our net operating loss and credit carryforwards. We began to file foreign tax returns in the United Kingdom starting with the year ended January 31, 2013, in France, Germany and Japan starting with the year ended January 31, 2014, in Canada starting with the year ended January 31, 2015, and in Australia, Sweden, and Netherlands starting with the year ended January 31, 2016. Certain tax years remain open to examination.

Note 13. Segments

Our chief operating decision maker reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. As such, we have a single reporting segment and operating unit structure. Since we operate in one operating segment, all required segment information can be found in the condensed consolidated financial statements.

24

BOX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Note 14. Subsequent Events

On April 7, 2021, we entered into an investment agreement (Investment Agreement) with certain investment funds which are managed or advised by KKR Credit Advisors (US) LLC or Affiliates thereto (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 “Issuance”).

Prior to the consummation of the Issuance and as expressly contemplated by the Investment Agreement, KKR elected to syndicate a portion of the investment to certain investment partners. Each of the KKR-led group agreed to become a “party”, “Permitted Investor Transferee”, and “Investor Party” under the Investment Agreement.

The closing of the Issuance occurred on May 12, 2021.

On June 2, 2021 we announced the commencement of a “modified Dutch Auction” tender offer to purchase up to $500 million in value of shares of our Class A common stock, or such lesser number of shares of our Class A common stock as are properly tendered and not properly withdrawn, at a price not less than $22.75 nor greater than $25.75 per share, to the seller in cash, less any applicable withholding taxes and without interest. The tender offer is scheduled to expire at 12:00 midnight, New York City time, at the end of the day on June 29, 2021, unless the offer is extended or terminated. We expect to use substantially all of the proceeds from the Issuance to fund our purchase of shares pursuant to the tender offer.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in the section titled “Risk Factors” and in other parts of this Quarterly Report on Form 10-Q.

Overview

Box is the Content Cloud: one secure, cloud-native platform for managing the entire content journey. Content – from blueprints to wireframes, videos to documents, proprietary formats to PDFs – is the source of an organization’s unique value. Our cloud content management platform enables our customers, including 67% of the Fortune 500, to securely manage the entire content lifecycle, from the moment a file is created or ingested to when it’s 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.

With our Software-as-a-Service (SaaS) platform, users can collaborate on content both internally and with external parties, automate content-driven business processes, develop custom applications, and implement data protection, security and compliance features to comply with legal and regulatory requirements, internal policies and industry standards and regulations. The Box Content Cloud accelerates business processes, improves employee productivity, enables secure remote work, and protects an organization’s most valuable data. Our platform enables a broad set of high-value business use cases across enterprises, hundreds of file formats and media types, and user experiences. Our platform integrates with leading enterprise business applications, and is compatible with multiple application environments, operating systems and devices, ensuring that workers can securely access their critical business content whenever and wherever they need it.

In addition, we continue to innovate by expanding our core services and offerings with a focus on frictionless security and compliance, seamless internal and external collaboration and workflow, and integration with best-of-breed applications. For example, we provide Box Shield, our advanced security offering that helps customers reduce the risk of accidental data leakage and protect their business from insider threats and account compromise; Box KeySafe, a solution that builds on top of Box’s strong encryption and security capabilities to give customers greater control over the encryption keys used to secure the file contents that are stored with Box; Box Governance, which gives customers a better way to comply with regulatory policies, satisfy e-discovery requests and effectively manage sensitive business information; Box Relay, which allows our end users to easily build, manage and track their own workflows; Box Platform, which further enables customers and partners to build enterprise apps using our open APIs and developer tools; and Box Zones, which gives global customers the ability to store their data locally in certain regions. With Box Consulting, we also provide in-house professional services such as implementation support, content migration, and change management. The increasing traction of these product innovations allows our customers to realize the full set of capabilities of our Content Cloud.

We are also continuing to expand the scope of what customers can do with their content using Box. In February 2021, we announced our decision to acquire SignRequest, a leading electronic signature provider, and to develop Box Sign – an e-signature solution natively integrated into Box. With Box Sign, our customers will be able to send, sign, and manage documents within their content platform of record – rather than using siloed, costly point solutions. In February 2021, we also announced the introduction of our all-new Box Shuttle, our content migration service. With the all-new Box Shuttle, we’re making it easier and more cost-effective for customers to get their content into Box, thereby allowing them to apply the same security and governance policies across all of their business-critical content.

We offer our solution to our customers as a subscription-based service, with subscription fees based on the requirements of our customers, including the number of users and functionality deployed. The majority of our customers subscribe to our service through one-year contracts, although we also offer our services for terms ranging from one month to three years or more. We typically invoice our customers at the beginning of the term, in multiyear, annual, quarterly or monthly installments. We recognize revenue as we satisfy a performance obligation. Accordingly, due to our subscription model, we recognize revenue for our subscription and premier services ratably over the term of the contract.

Current Period Highlights

For the three months ended April 30, 2021 and 2020, our revenue was $202.4 million and $183.6 million, respectively, representing year-over-year growth of 10%. As of April 30, 2021, our remaining performance obligations were $864.8 million, representing a 20% increase from our remaining performance obligations of $722.7 million as of April 30, 2020. For the three months

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ended April 30, 2021, our operating loss was $10.3 million, and our operating margin was negative 5%, compared to our operating loss of $24.2 million and our operating margin of negative 13% for the three months ended April 30, 2020. For the three months ended April 30, 2021, our free cash flow was positive $75.9 million, an increase of $36.1 million from our free cash flow of positive $39.9 million for the three months ended April 30, 2020.

COVID-19

We continue to monitor, analyze and respond to evolving developments regarding the COVID-19 pandemic, which has significantly impacted global economic activity and social practices. As part of these efforts, we have taken steps to protect the health and welfare of our employees by temporarily closing most of our offices and suspending almost all business-related travel, while continuing our commitment and efforts to serve customers that rely on us. In addition, we have shifted our customer and marketing events to virtual-only experiences.

Although the COVID-19 pandemic has not had a material adverse impact on our financial results for the first quarter of our fiscal year 2022, the pandemic has negatively impacted some of our customers and prospects. 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. Despite these adverse impacts, the COVID-19 pandemic has also created additional opportunities for Box by enabling our customers’ and prospects’ employees to engage in secure remote work through our platform.

The extent to which the COVID-19 pandemic ultimately impacts our business, results of operations, and financial position will depend on future developments, which are uncertain and cannot be predicted at this time, and include the severity and duration of the pandemic, the availability and effectiveness of COVID-19 vaccines globally, actions that may be taken by government authorities to contain the virus and minimize its economic impact, passing of or not passing further stimulus packages by governments, the impact of COVID-19 on our customers, business partners and employees, and other factors identified in Part II, Item 1A "Risk Factors" of this Form 10-Q. As a result, the extent and magnitude of the impact COVID-19 will have on our business and operating results cannot be predicted at this time.

Key Business Metrics

We use the key metrics below for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these key metrics provide meaningful supplemental information regarding our performance. We believe that both management and investors benefit from referring to these key metrics in assessing our performance and when planning, forecasting, and analyzing future periods. These key metrics also facilitate management's internal comparisons to our historical performance as well as comparisons to certain competitors' operating results. We believe these key metrics are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by institutional investors and the analyst community to help analyze the health of our business. The below data is presented in millions, except for percentage rate data. 

	Three Months Ended
	April 30,
	2021			2020
Remaining performance obligations (period end)	$	864.8		$	722.7
Remaining performance obligations growth rate		20	%		13	%
Billings	$	159.4		$	128.1
Billings growth rate		24	%		8	%
Free cash flow	$	75.9		$	39.9
Net retention rate (period end)		103	%		107	%

Remaining Performance Obligations

Remaining performance obligations (RPO) represent, at a point in time, contracted revenue that has not yet been recognized. RPO consists of deferred revenue and backlog, offset by contract assets. Backlog is defined as non-cancellable contracts deemed certain to be invoiced and recognized as revenue in future periods. Future invoicing is determined to be certain when we have an executed non-cancellable contract or a significant penalty is due upon cancellation, and invoicing is not dependent on a future event such as the delivery of a specific new product or feature, or the achievement of contractual contingencies. While Box believes RPO is a leading indicator of revenue as it represents sales activity not yet recognized in revenue, it is not necessarily indicative of future revenue growth as it is influenced by several factors, including seasonality, contract renewal timing, average contract terms and foreign currency exchange rates. Box monitors RPO to manage the business and evaluate performance. We do not consider RPO to be a non-GAAP financial measure given that it is calculated in accordance with GAAP.

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RPO as of April 30, 2021 were $864.8 million, an increase of 20% from April 30, 2020. The increase in RPO was primarily driven by expansion within existing customers as they broadened their deployment of our product offerings, longer customer contract durations, the addition of new customers, and the timing of customer-driven renewals.

Billings

Billings represent our revenue plus the changes in deferred revenue and contract assets in the period. Billings we record in any particular period primarily reflect subscription renewals and expansion within existing customers plus sales to new customers, and represent amounts invoiced for all of our products and professional services. We typically invoice our customers at the beginning of the term, in multiyear, annual, quarterly or monthly installments. If the customer negotiates to pay the full subscription amount at the beginning of the period, the total subscription amount for the entire term will be reflected in billings. If the customer negotiates to be invoiced annually or more frequently, only the amount billed for such period will be included in billings.

Billings help investors better understand our sales activity for a particular period, which is not necessarily reflected in our revenue given that we recognize subscription revenue ratably over the contract term. We consider billings a significant performance measure. We monitor billings to manage our business, make planning decisions, evaluate our performance and allocate resources. We believe that billings offer valuable supplemental information regarding the performance of our business and will help investors better understand the sales volumes and performance of our business. We do not consider billings to be a non-GAAP financial measure given that it is calculated using exclusively revenue, deferred revenue, and contract assets, all of which are financial measures calculated in accordance with GAAP.

Billings for the three months ended April 30, 2021 were $159.4 million, an increase of 24% from the three months ended April 30, 2020. The increase in billings was primarily driven by expansion within existing customers as they broadened their deployment of our product offerings, longer customer contract durations, the addition of new customers, and the timing of customer-driven renewals.

Our use of billings has certain limitations as an analytical tool and should not be considered in isolation or as a substitute for revenue or an analysis of our results as reported under GAAP. Billings are recognized when invoiced, while the related subscription and premier services revenue is recognized ratably over the contract term as we satisfy a performance obligation. Also, other companies, including companies in our industry, may not use billings, may calculate billings differently, may have different billing frequencies, or may use other financial measures to evaluate their performance, all of which could reduce the usefulness of billings as a comparative measure.

Over time, we expect to continue to normalize payment durations. In addition, as we have gained and expect to continue to gain more traction with large enterprise customers, we also anticipate our quarterly billings to increasingly concentrate in the back half of our fiscal year, especially in the fourth quarter.

A calculation of billings starting with revenue, the most directly comparable GAAP financial measure, is presented below (in thousands):

	Three Months Ended
	April 30,
	2021			2020
GAAP revenue	$	202,441		$	183,561
Deferred revenue, end of period		423,249			368,349
Less: deferred revenue, beginning of period		(465,613	)		(423,849	)
Contract assets, beginning of period		25			—
Less: contract assets, end of period		(677	)		—
Billings	$	159,425		$	128,061

Free Cash Flow

We define free cash flow as cash flows from operating activities less purchases of property and equipment, principal payments of finance lease liabilities, capitalized internal-use software costs, and other items that did not or are not expected to require cash settlement and that management considers to be outside of our core business. We specifically identify adjusting items in our reconciliation of GAAP to non-GAAP financial measures. We consider free cash flow to be a profitability and liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can possibly be used for investing in our business and strengthening the balance sheet, but it is not intended to represent the residual cash flow available for discretionary expenditures. A reconciliation of free cash flow to net cash provided by operating activities, its nearest

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GAAP equivalent, is presented in the non-GAAP Financial Measures section of this report. The presentation of free cash flow is also not meant to be considered in isolation or as an alternative to cash flows from operating activities as a measure of liquidity.

For the three months ended April 30, 2021 and 2020, free cash flow was positive $75.9 million and positive $39.9 million, respectively.

Net Retention Rate

Net retention rate is defined as the net percentage of Total Account Value (TAV) retained from existing customers, including expansion. We calculate our net retention rate as of a period end by starting with the TAV from customers as of 12 months prior to such period end (Prior Period TAV) and a subscription customer of Box for at least 12 months. We then calculate TAV from these same customers as of the current period end (Current Period TAV). Finally, we divide the Current Period TAV by the Prior Period TAV and report the average of this calculation over the prior 12 months to arrive at our net retention rate. We believe our net retention rate is an important metric that provides insight into the long-term value of our subscription agreements and our ability to retain and grow revenue from our customer base. Net retention rate is an operational metric and there is no comparable GAAP financial measure to which we can reconcile this particular key metric.

Our net retention rates were 103% and 107% as of April 30, 2021 and 2020, respectively. Our net retention rates were primarily attributable to seat growth in existing customers and strong attach rates of add-on products. As our customers purchase add-on products, 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 have been a significant factor in our customer retention results. As we penetrate customer accounts, we expect our net retention rate to remain above 100% for the foreseeable future.

Components of Results of Operations

Revenue

We derive our revenue primarily from three sources: (1) subscription revenue, which is comprised of subscription fees from customers who have access to our cloud content management platform and other subscription-based services, which all include routine customer support; (2) revenue from customers purchasing our premier services package; and (3) revenue from professional services such as implementing best practice use cases, project management and implementation consulting services.

To date, practically all of our revenue has been derived from subscription and premier services. Subscription and premier services revenue are driven primarily by the number of customers, the number of seats sold to each customer and the price of our services.

We recognize revenue as we satisfy a performance obligation. Accordingly, due to our subscription model, we recognize revenue for our subscription and premier services ratably over the contract term. We typically invoice our customers at the beginning of the term, in multiyear, annual, quarterly or monthly installments. Our subscription and premier services contracts are typically non-cancellable and do not contain refund-type provisions. The majority of our customers subscribe to our service through one-year contracts, although we also offer our services for terms ranging between one month to three years or more.

Professional services are generally billed on a fixed price basis, for which revenue is recognized over time based on the proportion performed. Professional services revenue was not material as a percentage of total revenue for all periods presented.

Revenue is presented net of sales and other taxes we collect on behalf of governmental authorities.

Cost of Revenue

Our cost of revenue consists primarily of costs related to providing our subscription services to our paying customers, including employee compensation and related expenses for data center operations, customer support and professional services personnel, payments to outside technology service providers, depreciation of servers and equipment, security services and other tools, as well as amortization expense associated with acquired technology and capitalized internally developed software. We allocate overhead such as rent, information technology costs and employee benefit costs to all departments based on headcount. As such, general overhead expenses are reflected in cost of revenue and each of the operating expense categories set forth below. 

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Operating Expenses

Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses. Personnel costs are the most significant component of each category of operating expenses. Operating expenses also include allocated overhead costs for facilities, information technology costs and employee benefit costs.

Research and Development. Research and development expense consists primarily of employee compensation and related expenses, as well as allocated overhead. Our research and development efforts are focused on scaling our platform, building an ecosystem of best-of-breed applications and platforms, infrastructure, adding enterprise grade features, functionality and enhancements such as workflow automation, intelligent content management capabilities, and advanced security to enhance the ease of use of our cloud content management services. We capitalize certain qualifying costs to develop software for internal use incurred during the application development stage.

Sales and Marketing. Sales and marketing expense consists primarily of employee compensation and related expenses, sales commissions, marketing programs, travel-related expenses, as well as allocated overhead. Marketing programs include but are not limited to advertising, events, corporate communications, brand building, and product marketing. Sales and marketing expense also consists of data center and customer support costs related to providing our cloud-based services to our free users. We market and sell our cloud content management services worldwide through our direct sales organization and through indirect distribution channels such as strategic resellers.

General and Administrative. General and administrative expense consists primarily of employee compensation and related expenses for administrative functions including finance, legal, human resources, recruiting, information systems, security, compliance, fees for external professional services and cloud-based enterprise systems, as well as allocated overhead. External professional services fees are primarily comprised of outside legal, accounting, audit and outsourcing services.

Interest and Other Expense, Net

Interest and other expense, 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 interest rate swap agreement, interest expense related to finance leases, unused commitment fees on our line of credit, the amortization of capitalized debt issuance costs, fees on our letters of credit, 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. We have historically invested our cash and cash equivalents in overnight deposits, certificates of deposit, money market funds, and short term, investment-grade corporate debt, marketable securities and asset backed securities.

Provision for Income Taxes

Provision for income taxes consists primarily of income taxes in certain foreign jurisdictions in which we conduct business and state income taxes in the United States and, as applicable, changes in our deferred taxes and related valuation allowance positions and uncertain tax positions.

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Results of Operations

The following tables set forth our results of operations for the periods presented (in thousands, except per share amounts, and as a percentage of our revenue):

	Three Months Ended
	April 30,
	2021			2020
Revenue	$	202,441		$	183,561
Cost of revenue (1)		60,947			53,995
Gross profit		141,494			129,566
Operating expenses:
Research and development (1)		50,859			53,114
Sales and marketing (1)		69,811			72,750
General and administrative (1)		31,087			27,942
Total operating expenses		151,757			153,806
Loss from operations		(10,263	)		(24,240	)
Interest and other expense, net		(3,999	)		(1,103	)
Loss before provision for income taxes		(14,262	)		(25,343	)
Provision for income taxes		311			207
Net loss	$	(14,573	)	$	(25,550	)
Net loss per share, basic and diluted	$	(0.09	)	$	(0.17	)
Weighted-average shares used to compute net loss per share, basic and diluted		161,733			151,943

(1) Includes stock-based compensation expense as follows:

	Three Months Ended
	April 30,
	2021		2020
Cost of revenue	$	5,340	$	4,541
Research and development		15,453		17,287
Sales and marketing		11,551		10,079
General and administrative		9,446		8,136
Total stock-based compensation	$	41,790	$	40,043

	Three Months Ended
	April 30,
	2021				2020
Percentage of Revenue:
Revenue		100		%		100		%
Cost of revenue (1)		30				29
Gross profit		70				71
Operating expenses:
Research and development (1)		25				29
Sales and marketing (1)		35				40
General and administrative (1)		15				15
Total operating expenses		75				84
Loss from operations		(5	)			(13	)
Interest expense, net		(2	)			(1	)
Other income, net		—				—
Loss before provision for income taxes		(7	)			(14	)
Provision for income taxes		—				—
Net loss		(7	)	%		(14	)	%

(1) Includes stock-based compensation expense as follows:

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	Three Months Ended
	April 30,
	2021			2020
Cost of revenue		3	%		3	%
Research and development		7			9
Sales and marketing		6			6
General and administrative		5			4
Total stock-based compensation		21	%		22	%

Comparison of the Three Months Ended April 30, 2021 and 2020

Revenue

	Three Months Ended
	April 30,
	2021		2020		$ Change		% Change
	(dollars in thousands)
Revenue	$	202,441	$	183,561	$	18,880		10	%

The increase in revenue was primarily driven by expansion within our existing customers as they broadened their deployment of our product offerings with strong attach rates of add-on products at higher price per seat. Additionally, the increase in subscription services was also driven by the addition of new customers, as the number of paying organizations increased by 6% from April 30, 2020 to April 30, 2021. During the three months ended April 30, 2021, we experienced strong growth in the Japan market, driving an increase in revenue from non-U.S. customers to 31%, compared to 27% during the three months ended April 30, 2020. This increase is partially offset by customers partially churning their deployment with Box.

Cost of Revenue

	Three Months Ended
	April 30,
	2021			2020			$ Change		% Change
	(dollars in thousands)
Cost of revenue	$	60,947		$	53,995		$	6,952		13	%
Percentage of revenue		30	%		29	%

The increase in absolute dollars was primarily due to an increase of $3.2 million in hosted data service costs, an increase of $0.9 million in acquired intangible assets amortization, and an increase of $0.8 million in software and maintenance expense primarily driven by increases in amortization of internally developed software and on-premises contracts. In addition, there were increases of $0.8 million and $0.7 million in stock-based compensation expense and employee and related costs, respectively. Cost of revenue as a percentage of revenue increased 100 basis points year-over-year. We expect our cost of revenue to increase in dollars but decrease slightly as a percentage of revenue over time as we continue to optimize infrastructure efficiency.

Research and Development

	Three Months Ended
	April 30,
	2021			2020			$ Change			% Change
	(dollars in thousands)
Research and development	$	50,859		$	53,114		$	(2,255	)		-4	%
Percentage of revenue		25	%		29	%

The decrease in absolute dollars was primarily due to decreases of $2.0 million and $1.0 million in stock-based compensation expense and employee and related costs, respectively, due to a reduction in headcount and increased concentration of research and development in lower cost regions. The decrease in research and development expenses was partially offset by a decrease of $0.6 million in capitalized internally developed software costs. Research and development expenses as a percentage of revenue decreased 400 basis points year-over-year. We continue to invest in enhancements of our products and services, developing new products, and further differentiating our offerings. We expect our research and development expenses to increase in dollars but remain relatively

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stable as a percentage of revenue over time, as we continue to make significant improvements to our content cloud product offerings and services, including the introduction Box Sign and the expansion of our advanced security, compliance, collaboration, workflow automation, and integration capabilities.

Sales and Marketing

	Three Months Ended
	April 30,
	2021			2020			$ Change			% Change
	(dollars in thousands)
Sales and marketing	$	69,811		$	72,750		$	(2,939	)		-4	%
Percentage of revenue		35	%		40	%

The decrease in absolute dollars was primarily due to decreases of $1.8 million and $0.7 million in employee and related costs and allocated overhead costs, respectively, due to a reduction in headcount. In addition, there were decreases of $1.5 million and $0.5 million in travel-related costs and marketing expenses, respectively, primarily due to the impact of the COVID-19 pandemic, a decrease of $1.3 million in outside agency and consulting services, and a decrease of $0.4 million in data center and customer support costs to support our free users. The decrease in sales and marketing expenses was partially offset by an $2.1 million increase in commission expenses primarily driven by increased sales and increased amortization of deferred commissions and a $1.5 million increase in stock-based compensation expense. Sales and marketing expenses as a percentage of revenue decreased 500 basis points year-over-year due to the impact of the COVID-19 pandemic and our focus on driving greater efficiency from our solution selling strategy and simplifying our product offerings, as well our focus on higher performing geographies and segments producing a greater return on investment.

Our sales and marketing expenses are generally higher for acquiring new, or expanding existing, customers than for renewals of existing customer subscriptions. We expect to continue to invest in capturing our large market opportunity globally and capitalize on our competitive position with a continued focus on our profitability objectives. We expect our sales and marketing expenses to increase in dollars but continue to decrease as a percentage of revenue over time, as our existing customer base grows and a relatively higher percentage of our revenue is attributable to renewals versus new or expanding Box deployments and as we continue to focus on improving sales productivity and simplifying our product offerings. While we expect certain expenses that were reduced due to COVID-19 to partially return over time, we do not expect to return to pre-COVID-19 levels, even after we return to an office-based environment.

General and Administrative

	Three Months Ended
	April 30,
	2021			2020			$ Change		% Change
	(dollars in thousands)
General and administrative	$	31,087		$	27,942		$	3,145		11	%
Percentage of revenue		15	%		15	%

The increase in absolute dollars was primarily due to an increase of $1.3 million in stock-based compensation expense driven by equity grants to existing and new employees, an increase of $0.3 million in employee and related costs driven by the refresh of salaries in the current fiscal year, an increase of $0.8 million in acquisition-related fees, and an increase of $0.6 million in outside agency, consulting, and audit and tax services. The increase in general and administrative expenses was partially offset by a decrease of $0.4 million in fees related to shareholder activism. General and administrative expense as a percentage of revenue remained flat year-over-year. We expect our general and administrative expense to slowly increase in dollars but to decrease as a percentage of revenue over time as we benefit from greater operational efficiency.

Interest and Other Expense, Net

	Three Months Ended
	April 30,
	2021			2020			$ Change			% Change
	(dollars in thousands)
Interest and other expense, net	$	(3,999	)	$	(1,103	)	$	(2,896	)	*

* Percentage change not meaningful.

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The increase in interest and other expense, net is primarily due to an increase of $2.5 million in foreign currency losses and a decrease of $0.4 million in interest income from our certificates of deposit and money market funds due to a lower interest rate environment.

Liquidity and Capital Resources

As of April 30, 2021, we had cash and cash equivalents, restricted cash, and short-term investments of $612.3 million. Our cash and cash equivalents and short-term investments are comprised primarily of overnight cash deposits, money market funds, and certificates of deposit. Since our inception, we have financed our operations primarily through equity, cash generated from sales and debt financing. We believe our existing cash and cash equivalents, together with our finance leases and credit facilities, will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months. Our future capital requirements will depend on many factors including our growth rate, subscription renewal activity, billing frequency, data center expansions, the timing and extent of spending to support development efforts, the expansion of international activities, the introduction of new and enhanced services 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.

Cash Flows

For the three months ended April 30, 2021 and 2020, our cash flows were as follows (in thousands):

	Three Months Ended
	April 30,
	2021			2020
Net cash provided by operating activities	$	94,772		$	61,917
Net cash used in investing activities		(108,965	)		(4,591	)
Net cash (used in) provided by financing activities		(18,848	)		15,303

Operating Activities

For the three months ended April 30, 2021, cash provided by operating activities was $94.8 million. The primary factors affecting our operating cash flows during this period were our net loss of $14.6 million, favorably offset by non-cash charges of $41.8 million for stock-based compensation, $19.4 million for depreciation and amortization of our property and equipment and capitalized software, $10.5 million for amortization of deferred commissions, and net cash inflows of $37.2 million provided by changes in our operating assets and liabilities.

The primary drivers for the changes in operating assets and liabilities include a $116.8 million decrease in accounts receivable that was primarily due to higher sales and relative timing of our cash collections and a $10.9 million decrease in operating right-of-use assets, partially offset by a $47.0 million decrease in deferred revenue that was primarily due to seasonality in our sales cycle which is concentrated in the back half of our fiscal year, a $13.9 million decrease in operating lease liabilities, an $11.9 million decrease in accounts payable, accrued expenses and other liabilities, an $8.8 million increase in prepaid and other assets, and a $7.9 million increase in deferred commissions due to new and expanded deployments with paying customers during the period.

Investing Activities

Cash used in investing activities of $109.0 million for the three months ended April 30, 2021 was primarily driven by $56.6 million in cash paid for acquisitions, net of cash acquired, $50.0 million in cash paid for the purchase of our short-term investment, $1.2 million of capitalized internally developed software costs associated with the development of additional significant features and functionality to our product, and $1.1 million of fixed asset purchases to support our offices and employees.

Financing Activities

Cash used in financing activities of $18.8 million for the three months ended April 30, 2021 was primarily driven by $15.7 million of employee payroll taxes paid related to net share settlement of restricted stock, $13.3 million of principal payments of finance lease liabilities, and $3.3 million of capitalized internal-use software costs associated with our on-premises software contracts, partially offset by $12.5 million from issuances of common stock under the 2015 ESPP and $1.4 million of proceeds from the exercise of stock options.

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Debt

In January 2021, we issued $345.0 million aggregate principal amount of 0.00% convertible senior notes due January 15, 2026. The Notes are senior unsecured obligations and do not bear regular interest. Each $1,000 principal amount of the Notes will initially be convertible into 38.7665 shares of our Class A common stock, which is equivalent to an initial conversion price of approximately $25.80 per share, subject to adjustment upon the occurrence of specified events. Refer to Note 9 for a description of our convertible senior notes.

On November 27, 2017, we entered into a secured credit agreement (as amended or otherwise modified from time to time, the November 2017 Facility). The maturity date of borrowings under the November 2017 Facility is July 12, 2022, the revolving commitment is $100.0 million, and it provides for a sublimit for the issuance of letters of credit of $45.0 million. As of April 30, 2021, debt outstanding under the November 2017 Facility was $30.0 million. Refer to Note 9 for a description of the November 2017 Facility.

Off-Balance Sheet Arrangements

Through April 30, 2021, we did not have any relationships with unconsolidated entities that have, or are reasonably likely to have, a material effect on our financial statements.

Contractual Obligations and Commitments

Our principal commitments consist of (i) obligations under operating leases for office spaces and data centers, (ii) obligations under finance leases for servers and related equipment for or data center operations, (iii) purchase obligations not recognized on the condensed consolidated balance sheet as of April 30, 2021, which relate primarily to infrastructure services and IT software and support services, and (iv) debt, including obligations under both our November 2017 Facility and Notes. For more information regarding our obligations for leases, purchase agreements, and debt, refer to Notes 5, 8, and 9, respectively, in Part I, Item 1. Financial Statements.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.

Except for items discussed under Use of Estimates and Recently Adopted Accounting Pronouncements under Part I, Item 1. Financial Statements—Note 1, there have been no material changes to our critical accounting policies and estimates during the three months ended April 30, 2021 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, 2021.

Recent Accounting Pronouncements

Refer to Part I, Item 1. Financial Statements—Note 1 for information regarding the effect of new accounting pronouncements on our financial statements.

Non-GAAP Financial Measures

Regulation S-K Item 10(e), “Use of Non-GAAP Financial Measures in Commission Filings,” defines and prescribes the conditions for use of non-GAAP financial information. Our measures of non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income (loss) per share, and free cash flow (collectively, the non-GAAP financial measures) each meet the definition of a non-GAAP financial measure.

We use these non-GAAP financial measures and our key metrics for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures and key metrics provide meaningful supplemental information regarding our performance by excluding certain expenses that may not be indicative of our recurring core business operating results. We believe that both management and investors benefit from referring to these non-GAAP financial measures and key metrics in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures and key metrics also facilitate management’s internal comparisons to our historical performance as well as comparisons to our competitors’ operating results. We believe these non-GAAP financial measures and key metrics are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.

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Non-GAAP operating income (loss) and non-GAAP operating margin

We define non-GAAP operating income (loss) as operating income (loss) excluding expenses related to stock-based compensation (SBC), acquired intangible assets amortization, and as applicable, other special items. Non-GAAP operating margin is defined as non-GAAP operating income (loss) divided by revenue. Although SBC is an important aspect of the compensation of our employees and executives, determining the fair value of certain of the stock-based instruments we utilize involves a high degree of judgment and estimation and the expense recorded may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards. Furthermore, unlike cash compensation, the value of stock options, which is an element of our ongoing stock-based compensation expense, is determined using a complex formula that incorporates factors, such as market volatility, that are beyond our control. For restricted stock unit awards, the amount of stock-based compensation expenses is not reflective of the value ultimately received by the grant recipients. Management believes it is useful to exclude SBC in order to better understand the long-term performance of our core business and to facilitate comparison of our results to those of peer companies. Management also views amortization of acquisition-related intangible assets, such as the amortization of the cost associated with an acquired company’s developed technology and trade names, as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are continually evaluated for impairment, amortization of the cost of purchased intangibles is a static expense, one that is not typically affected by operations during any particular period. Furthermore, Box excludes the following expenses as they are considered by management to be special items outside of Box’s core operating results: (1) fees related to shareholder activism, which include directly applicable third-party advisory and professional service fees, (2) expenses related to certain litigation, (3) expenses associated with restructuring activities, consisting primarily of severance and other personnel-related costs, and (4) expenses related to announced acquisitions, including transaction and discrete tax costs. There are no expenses related to litigation or restructuring activities excluded from non-GAAP operating income (loss) in any of the periods presented.

Non-GAAP net income (loss) and net income (loss) per share

We define non-GAAP net income (loss) as net loss excluding expenses related to stock-based compensation, acquired intangible assets amortization and as applicable, other special items. We specifically identify other​ adjusting ​items in ​our reconciliation of GAAP to non-GAAP net income (loss). These items include expenses related to certain litigation and the amortization of the issuance costs associated with our Notes, which are amortized as interest expense, because they are considered by management to be special items outside our core operating results. We define non-GAAP net income (loss) per share as non-GAAP net income (loss) divided by the weighted-average outstanding shares. Similarly, the same adjusting items specified in our reconciliation of GAAP to non-GAAP net income (loss) are also excluded from the calculation of non-GAAP net income (loss) per share.

Free Cash Flow

We define free cash flow as cash flows from​ operating activities less purchases of property and equipment, principal payments of finance lease liabilities, capitalized internally developed software costs, and other items that did not or are not expected to require cash settlement and that management considers to be outside ​of our core business. We specifically identify other adjusting ​items in ​our reconciliation of GAAP to non-GAAP ​financial measures. We consider free cash flow to be a profitability and liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can possibly be used for investing in our business and strengthening the​ balance sheet; but it is not intended to represent the residual cash flow available for discretionary expenditures. A reconciliation of free cash flow to net cash provided by operating activities, its nearest GAAP equivalent, is presented below. The presentation of free cash flow is also not meant to be considered in isolation or as an alternative to cash flows from operating activities as a measure of liquidity.

Limitations on the use of non-GAAP financial measures

A limitation of our non-GAAP financial measures is that they do not have uniform definitions. Our definitions will likely differ from the definitions used by other companies, including peer companies, and therefore comparability may be limited. Thus, our non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with GAAP. Additionally, in the case of stock-based compensation expense, if we did not pay a portion of compensation in the form of stock-based compensation expense, the cash salary expense included in costs of revenue and operating expenses would be higher which would affect our cash position.

We compensate for these limitations by reconciling non-GAAP financial measures to the most comparable GAAP financial measures. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view our non-GAAP financial measures in conjunction with the most comparable GAAP financial measures.

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Our reconciliation of the non-GAAP financial measures for the three months ended April 30, 2021 and 2020 are as follows (in thousands, except per share data and percentages):

	Three Months Ended
	April 30,
	2021				2020
GAAP operating loss	$	(10,263	)		$	(24,240	)
Stock-based compensation		41,790				40,043
Acquired intangible assets amortization		901				—
Acquisition-related expenses		920				—
Fees related to shareholder activism		1,050				1,402
Non-GAAP operating income	$	34,398			$	17,205
GAAP operating margin		(5	)	%		(13	)	%
Stock-based compensation		21				22
Acquired intangible assets amortization		—				—
Acquisition-related expenses		—				—
Fees related to shareholder activism		1				—
Non-GAAP operating margin		17		%		9		%
GAAP net loss	$	(14,573	)		$	(25,550	)
Stock-based compensation		41,790				40,043
Acquired intangible assets amortization		901				—
Acquisition-related expenses		920				—
Fees related to shareholder activism		1,050				1,402
Amortization of debt issuance costs		469				—
Non-GAAP net income	$	30,557			$	15,895
GAAP net loss per share, basic and diluted	$	(0.09	)		$	(0.17	)
Stock-based compensation		0.26				0.26
Acquired intangible assets amortization		—				—
Acquisition-related expenses		0.01				—
Fees related to shareholder activism		0.01				0.01
Amortization of debt issuance costs		—				—
Non-GAAP net income per share, basic	$	0.19			$	0.10
Non-GAAP net income per share, diluted	$	0.18			$	0.10
Weighted-average shares used to compute GAAP net loss per share, basic and diluted		161,733				151,943
Weighted-average shares used to compute Non-GAAP net income per share
Basic		161,733				151,943
Diluted		169,221				157,608
GAAP net cash provided by operating activities	$	94,772			$	61,917
Purchases of property and equipment, net of proceeds from sales		(1,145	)			(1,407	)
Principal payments of finance lease liabilities		(13,262	)			(17,356	)
Capitalized internal-use software costs		(4,475	)			(3,291	)
Non-GAAP free cash flow	$	75,890			$	39,863
GAAP net cash used in investing activities	$	(108,965	)		$	(4,591	)
GAAP net cash (used in) provided by financing activities	$	(18,848	)		$	15,303

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We had cash and cash equivalents, restricted cash, and short-term investments of $612.3 million as of April 30, 2021. Our cash and cash equivalents primarily consist of overnight deposits and money market funds. We do not expect our operating results or cash flows to be materially affected by a sudden change in market interest rates and we do not enter into investments for trading or speculative purposes.

Interest rate risk also reflects our exposure to movements in interest rates associated with the November 2017 Facility. As of April 30, 2021, we had total debt outstanding with a carrying amount of $30.0 million which approximates fair value. The revolving loans accrue interest at a prime rate plus a margin of 0.25% or, at our option, a LIBOR rate (based on one, three or six-month interest periods) plus a margin of 1.00%.

Effective September 5, 2019, we entered into an interest rate swap agreement with Wells Fargo Bank, National Association, in order to minimize our interest rate risk exposure due to the volatility of LIBOR. Under the Swap Agreement, we have hedged a portion of the variable interest payments of our debt by effectively fixing our interest payments over the five-year term of the agreement. As of April 30, 2021, our interest rate swap had a notional value of $30.0 million.

A hypothetical 10% increase or decrease in interest rates after April 30, 2021 under the November 2017 Facility and in connection with our Swap Agreement would not have a material impact on the combined net fair value of our outstanding debt and Swap Agreement.

In January 2021, we issued $345.0 million aggregate principal amount of 0.00% convertible senior notes due January 15, 2026. The Notes are senior unsecured obligations and do not bear regular interest. As a result, the interest and market value changes affect the fair value of the Notes but do not impact our financial position, cash flows, or results of operations. Additionally, we carry the Notes at face value on our balance sheet, and we present the fair value for required disclosure purposes only.

Foreign Currency Risk

Our sales contracts are denominated predominantly in U.S. dollars. We support sales contracts denominated in 11 foreign currencies and consequently, our customer billings denominated in foreign currencies are subject to foreign currency exchange risk. Five of the 11 currencies are only offered at this time through our online sales experience and are required to be settled by credit cards; accordingly, our foreign currency exposure on these transactions is limited only to ordinary credit card settlement timeframes. A portion of our operating expenses are incurred outside the United States and are denominated in foreign currencies, which are also subject to fluctuations due to changes in foreign currency exchange rates. Our international subsidiaries maintain certain asset and liability balances that are denominated in foreign currencies. Additionally, fluctuations in foreign currency exchange rates can result in fluctuations in our total assets, liabilities, and cash flows and may cause us to recognize transaction gains and losses in our statement of operations impacting our revenue and operating expenses. To date we have managed our foreign currency risk by maintaining offsetting assets and liabilities and minimizing non-U.S. dollar cash balances, and have not entered into derivatives or hedging transactions as our exposure to foreign currency exchange rates has not been material to our historical operating results; however, we may do so in the future if our exposure to foreign currency should become more significant. For the three months ended April 30, 2021, we recognized $2.2 million in foreign currency exchange losses. For the three months ended April 30, 2020, there were no material foreign exchange gains or losses.

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Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

From time to time, we are a party to litigation and subject to claims that arise in the ordinary course of business. We investigate these claims as they arise and accrue estimates for resolution of legal and other contingencies when losses are probable and estimable. Although the results of litigation and claims cannot be predicted with certainty, we believe there was not at least a reasonable possibility that we had incurred a material loss with respect to such loss contingencies as of April 30, 2021.

Item 1A. RISK FACTORS

Investing in our Class A common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Quarterly Report on Form 10-Q, including in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our condensed consolidated financial statements and related notes, before making a decision to invest in our Class A common stock. If any of the risks actually occur, our business, financial condition, operating results and prospects could be materially and adversely affected. In that event, the market price of our Class A common stock could decline, and you could lose part or all of your investment.

Risk Factors Summary

Our business is subject to a number of risks and uncertainties, including those risks discussed at length below. These risks include, among others, the following:

• The market in which we participate is intensely competitive, and if we do not compete effectively, our operating results could be harmed.

• Our business depends substantially on customers renewing their subscriptions with us and expanding their use of our services. Any decline in our customer renewals or failure to convince our customers to broaden their use of our services would harm our future operating results.

• If the market for cloud-based enterprise services declines or develops more slowly than we expect, our business could be adversely affected.

• Because we recognize revenue from subscriptions for our services over the term of the subscription, downturns or upturns in new business may not be immediately reflected in our operating results.

• If we are unable to attract new customers at rates that are consistent with our expectations, our future revenue and operating results could be adversely impacted.

• The continuing impacts of the COVID-19 pandemic, including the resultant economic impacts, may have an adverse effect on our business, operations and future financial performance.

• Actual or perceived security vulnerabilities in our services or any breaches of our security controls and unauthorized access to our or a customer’s data could harm our business and operating results.

• As a substantial portion of our sales efforts are increasingly focused on cloud content management use cases and are targeted at enterprise and highly-regulated customers, our sales cycles may become longer and more expensive, we may encounter greater pricing pressure and implementation and customization challenges, and we may have to delay revenue recognition for more complicated transactions, all of which could harm our business and operating results.

• If we fail to meet the service level commitments we provide under our subscription agreements, we could be obligated to provide credits or refunds for prepaid amounts related to unused subscription services or face subscription terminations, which could adversely affect our revenue. Furthermore, any failure in our delivery of high-quality customer support services may adversely affect our relationships with our customers and our financial results.

• Privacy concerns and laws or other domestic or foreign regulations may reduce the effectiveness of our services and harm our business.

• If we are not able to satisfy data protection, security, privacy, and other government- and industry-specific requirements, our growth could be harmed.

• Our platform must integrate with a variety of operating systems and software applications that are developed by others, and if we are unable to ensure that our solutions interoperate with such systems and applications, our service may become less competitive, and our operating results may be harmed.

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• If we fail to effectively manage our technical operations infrastructure, our customers may experience service outages and delays in the deployment of our services, which may adversely affect our business.

• Interruptions or delays in service from our third-party data center hosting facilities and cloud computing and hosting providers could impair the delivery of our services and harm our business.

• Our services are becoming increasingly mission-critical for our customers and if these services fail to perform properly or if we are unable to scale our services to meet the needs of our customers, our reputation could be adversely affected, our market share could decline and we could be subject to liability claims.

• Our growth depends in part on the success of our strategic relationships with third parties.

• We depend on highly skilled personnel to grow and operate our business, and if we are unable to hire, retain and motivate our personnel, we may not be able to grow effectively.

• Failure to adequately expand and optimize our direct sales force and successfully maintain our online sales experience will impede our growth.

• Any acquisitions and investments we make could disrupt our business and harm our financial condition and operating results.

• We may be sued by third parties for alleged infringement of their proprietary rights.

• Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and brand.

• Servicing our future debt may require a significant amount of cash, and we may not have sufficient cash flow from our business to settle conversions of our convertible senior notes in cash, repay the convertible senior notes at maturity, or repurchase the convertible senior notes as required following a fundamental change.

• The holders of Series A Convertible Preferred Stock will be entitled to vote on an as-converted to Class A common stock basis and have rights to approve certain actions.  Additionally, KKR may exercise influence over us through their ability to designate a member of our board of directors.

• The issuance of shares of our Series A Convertible Preferred Stock reduces the relative voting power of holders of our Class A common stock, and the conversion of those shares into shares of our Class A common stock would dilute the ownership of Class A common stockholders and may adversely affect the market price of our Class A common stock.

• Our Series A Convertible Preferred Stock has rights, preferences and privileges that are not held by, and are preferential to the rights of, our Class A common stockholders, which could adversely affect our liquidity and financial condition.

Risks Related to Our Business and Our Industry

The market in which we participate is intensely competitive, and if we do not compete effectively, our operating results could be harmed.

The market for cloud content management services is fragmented, rapidly evolving and highly competitive, with relatively low barriers to entry for certain applications and services. Many of our competitors and potential competitors are larger and have greater brand recognition, longer operating histories, and significantly greater resources than we do. Our primary competitors in the cloud content management market include Microsoft and OpenText (Documentum). In the enterprise file sync and share market, our primary competitors include Microsoft, Google and, to a lesser extent, Dropbox. With the introduction of new technologies and market entrants, we expect competition to intensify in the future. If we fail to compete effectively, our business will be harmed. Some of our competitors offer their products or services at a lower price or for free, which has placed pricing pressure on our business. If we are unable to achieve our target pricing levels, our operating results will be negatively impacted. In addition, pricing pressures and increased competition could result in reduced sales, lower margins, losses or the failure of our services to achieve or maintain widespread market acceptance, any of which could harm our business.

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Many of our competitors are able to devote greater resources to the development, promotion and sale of their products or services. In addition, many of our competitors have established marketing relationships and major distribution agreements with channel partners, consultants, system integrators and resellers. Moreover, many software vendors could bundle products or offer them at lower prices as part of a broader product sale or enterprise license arrangement. Some competitors may offer products or services that address business execution functions at lower prices or with greater depth than our services. Our competitors may be able to respond more quickly and effectively to new or changing opportunities, technologies, standards or customer requirements. Furthermore, some potential customers, particularly large enterprises, may elect to develop their own internal solutions. For any of these reasons, we may not be able to compete successfully against our current and future competitors.

Our business depends substantially on customers renewing their subscriptions with us and expanding their use of our services. Any decline in our customer renewals or failure to convince our customers to broaden their use of our services would harm our future operating results.

In order for us to maintain or improve our operating results, it is important that our customers renew their subscriptions with us when their existing subscription term expires. We cannot assure you that customers will renew their subscriptions upon expiration at the same or higher level of service, if at all. Our net retention rate has decreased over time, and may continue to decrease in the future, as some of our customers have elected and may elect not to renew their subscriptions with us or to decrease the scope of their deployments. Our net retention rates were approximately 103% and 107% as of April 30, 2021 and 2020, respectively.

Our net retention rate may decline or fluctuate as a result of a number of factors, including our customers’ satisfaction with our services, the effectiveness of our customer support services, the performance of our partners and resellers, our pricing, the prices of competing products or services, mergers and acquisitions affecting our customer base and our ability to successfully integrate acquired technology into our products, our ability to execute on our product roadmap, the effects of global economic conditions, such as those arising from the COVID-19 pandemic, or reductions in our customers’ spending levels. If our customers do not renew their subscriptions, renew them on less favorable terms, purchase fewer seats, or fail to purchase new product offerings, our revenue may decline, and we may not realize improved operating results from our customer base.

In addition, our business growth depends in part on our customers expanding their use of our services. The use of our cloud content management platform often expands within an organization as new users are added or as additional services are purchased by or for other departments within an organization. Further, as we have introduced new services throughout our operating history, our existing customers have constituted a significant portion of the users of such services. If our customers do not expand their use of our services, our operating results may be adversely affected.

If the market for cloud-based enterprise services declines or develops more slowly than we expect, our business could be adversely affected.

The market for cloud-based enterprise services is not as mature as the on-premise enterprise software market. Because we derive, and expect to continue to derive, substantially all of our revenue and cash flows from sales of our cloud content management solutions, our success will depend to a substantial extent on the widespread adoption of cloud computing in general and of cloud-based content management services in particular. Many organizations have invested substantial personnel and financial resources to integrate traditional enterprise software into their organizations and, therefore, may be reluctant or unwilling to migrate to a cloud-based model for storing, accessing, sharing and managing their content. It is difficult to predict customer adoption rates and demand for our services, the future growth rate and size of the cloud computing market or the entry of competitive services. The expansion of the cloud content management market depends on a number of factors, including the cost, performance and perceived value associated with cloud computing, as well as the ability of companies that provide cloud-based services to address security and privacy concerns. If there is a reduction in demand for cloud-based services, it could result in decreased revenue, harm our growth rates, and adversely affect our business and operating results.

Because we recognize revenue from subscriptions for our services over the term of the subscription, downturns or upturns in new business may not be immediately reflected in our operating results.

We generally recognize revenue from customers ratably over the terms of their subscription agreements, which are typically one year, although we also offer our services for terms ranging from one month to three years or more. As a result, most of the revenue we report in each quarter is the result of subscription agreements entered into during prior quarters. Consequently, a decline in new or renewed subscriptions in any one quarter may not be reflected in our revenue results for that quarter. However, any such decline will negatively affect our revenue in future quarters. Accordingly, the effect of significant downturns in sales, our failure to achieve our internal sales targets, a decline in the market acceptance of our services, or a decrease in our net retention rate may not be fully reflected in our operating results until future periods. Our subscription model also makes it difficult for us to rapidly increase our revenue through additional sales in any period, as revenue from additional sales must be recognized over the applicable subscription term.

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If we are unable to attract new customers at rates that are consistent with our expectations, our future revenue and operating results could be adversely impacted.

In order for us to improve our operating results and continue to grow our business, it is important that we continue to attract new customers and expand deployment of our solutions and products with existing customers. To the extent we are successful in increasing our customer base, we could incur increased losses because costs associated with new customers are generally incurred up front, while revenue is recognized ratably over the term of our subscription services. Alternatively, to the extent we are unsuccessful in increasing our customer base, we could also incur increased losses as costs associated with marketing programs and new products intended to attract new customers would not be offset by incremental revenue and cash flow. Catastrophic events, such as the COVID-19 pandemic, may financially impact our existing and prospective customers and cause them to delay or reduce their technology spending, which may adversely affect our ability to attract new customers. All of these factors could negatively impact our future revenue and operating results.

The continuing impacts of the COVID-19 pandemic may have an adverse effect on our business, operations and future financial performance.

In March 2020, the World Health Organization declared COVID-19 a pandemic. Governments and municipalities around the world have instituted measures to control the spread of COVID-19, including quarantines, shelter-in-place orders, school closures, travel restrictions, and closure of non-essential businesses. These measures have led to significant adverse economic impacts which have had, and could continue to have, an adverse impact on our business operations in a number of ways, including, without limitation, (1) disruptions to our sales operations and marketing efforts as a result of the inability of our sales team to travel and meet customers in person, (2) negative impacts on our customers and prospects that could result in (i) extended customer sales cycles, delayed spending on our services, impairment of our ability to collect accounts receivable, and (ii) reduced payment frequencies, demand for our services, renewal rates, and spending on our services, and (3) negative impacts to the financial condition or operations of our vendors and business partners, as well as disruptions to the supply chain of hardware needed to offer our services. Moreover, as a result of the COVID-19 pandemic, we are temporarily requiring nearly all of our employees to work remotely, which may lead to disruptions and decreased productivity and other adverse operational business impacts. The extent to which the COVID-19 pandemic and resultant economic impact affects our business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted.

Adverse economic conditions may negatively impact our business.

Our business depends on the overall demand for cloud content management services and on the economic health of our current and prospective customers. The United States and other key international economies have experienced cyclical downturns from time to time that have resulted in a significant weakening of the economy, more limited availability of credit, a reduction in business confidence and activity, and other difficulties that may affect one or more of the industries to which we sell our services. An economic downturn, recession, or uncertainty about economic conditions, including the effects of COVID-19, in the United States, Europe, Japan and other key markets for our services could cause customers to delay or reduce their information technology spending. This could result in reductions in sales of our services, longer sales cycles, reductions in subscription duration and value, slower adoption of new technologies and increased price competition. Any of these events would likely have an adverse effect on our business, operating results and financial position. In addition, there can be no assurance that cloud content management and collaboration spending levels will increase following any recovery.

If we are not able to successfully launch new products and services or provide enhancements or new features to our existing products and services, our business could be adversely affected.

Our industry is marked by rapid technological developments and new and enhanced applications and services. If we are unable to provide enhancements and new features for our existing services or offer new services that achieve market acceptance or keep pace with rapid technological developments, our business could be adversely affected. The success of any new products and services, enhancements, or modifications to our existing products and services depends on several factors, including their timely completion, introduction and market acceptance. We also may experience business or economic disruptions that could adversely affect the productivity of our employees and result in delays in our product development process. For example, as a result of the COVID-19 pandemic, we are temporarily requiring nearly all of our employees to work remotely, which may lead to disruptions and decreased productivity that could result in delays in our product development process. Failure in this regard may significantly impair our revenue growth and our future financial results. In addition, because our services are designed to operate on a variety of systems, we must continuously modify and enhance our services to keep pace with changes in internet-related hardware, mobile operating systems, and other software, communication, browser and database technologies. We may not be successful in developing these modifications and enhancements or bringing them to market in a timely fashion. Furthermore, modifications to existing platforms or technologies will increase our research and development expenses. Any failure of our services to operate effectively with existing or future network platforms and technologies could reduce the demand for our services, result in customer dissatisfaction and adversely affect our business.

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Actual or perceived security vulnerabilities in our services or any breaches of our security controls and unauthorized access to our or a customer’s data could harm our business and operating results.

The services we offer involve the storage of large amounts of our and our customers’ sensitive and proprietary information, some of which may be considered personally identifiable. Cyberattacks and other malicious internet-based activity, including ransomware, malware and viruses, continue to increase in frequency and magnitude and we face security threats from malicious third parties that could obtain unauthorized access to our systems, infrastructure and networks. These threats may come from a variety of sources including nation-state sponsored espionage and hacking activities, industrial espionage, organized crime, sophisticated organizations, hacking groups and individuals and insider threats. These sources can also implement social engineering techniques to induce our partners, users, employees or customers to disclose passwords or other sensitive information or take other actions to gain access to our data or our users’ data. Hackers that acquire user account information at other companies can attempt to use that information to compromise the accounts of personnel, or our users’ accounts if an account shares the same sensitive information such as passwords. As we increase our customer base and our brand becomes more widely known and recognized, and as our service is used in more heavily regulated industries where there may be a greater concentration of sensitive and protected data, such as healthcare, government, life sciences, and financial services, we may become more of a target for these malicious third parties. In addition, because Box is configured by administrators and users to select their default settings, the third-party integrations they enable, and their privacy and permissions settings, an administrator or user could intentionally or inadvertently configure settings to share their sensitive data. For example, a Box user can choose to share the content they store in Box with third parties by creating a link that can be customized to be accessible by anyone with the link. While this feature is designed to be used for a variety of legitimate use cases in which a user wishes to share non-sensitive content with a broad or public audience, if a user were to intentionally or inadvertently configure a setting that allowed public access to their sensitive data, that data could be discovered and accessed by an unintended third party.

Given that our customers manage significant amounts of sensitive and proprietary information on our platform, and many of our customers are in heavily regulated industries where there may be a greater concentration of sensitive and proprietary data, our reputation and market position are particularly sensitive to impacts from actual or perceived security breaches or concerns regarding security. If our security measures are or are believed to be inadequate or breached as a result of third-party action, employee negligence, error or malfeasance, product defects, social engineering techniques, improper user configuration or otherwise, and this results in, or is believed to result in, the disruption of the confidentiality, integrity or availability of our data or our customers’ data, we could incur significant liability to various parties, including our customers and individuals or organizations whose information is stored by our customers, and our business, reputation or competitive position may be harmed. Techniques used to obtain unauthorized access to, or to sabotage, systems or networks, are constantly evolving and generally are not recognized until launched against a target. Therefore, we may be unable to anticipate these techniques, react in a timely manner, or implement adequate preventive measures, and we may face delays in our detection or remediation of, or other responses to, security breaches and other security-related incidents. We also expect to incur significant costs in our ongoing efforts to detect and prevent security breaches and other security-related incidents, and in the event of an actual or perceived security breach or other security-related incident. Additionally, our service providers may suffer, or be perceived to suffer, data security breaches or other incidents that may compromise data stored or processed for us that may give rise to any of the foregoing.

Our customer contracts often include (i) specific obligations that we maintain the availability of the customer’s data through our service and that we secure customer content against unauthorized access or loss, and (ii) provisions whereby we indemnify our customers for third-party claims asserted against them that result from our failure to maintain the availability of their content or securing the same from unauthorized access or loss. While our customer contracts contain limitations on our liability in connection with these obligations and indemnities, if an actual or perceived security breach occurs, the market perception of the effectiveness of our security measures could be harmed, we could be subject to indemnity or damage claims in certain customer contracts, and we could lose future sales and customers, any of which could harm our business and operating results. Furthermore, while our errors and omissions insurance policies include liability coverage for certain of these matters, if we experience a widespread security breach or other incident that impacts a significant number of our customers to whom we owe indemnity obligations, we could be subject to indemnity claims or other damages that exceed our insurance coverage. We also cannot be certain that our insurance coverage will be adequate for data handling or data security liabilities actually incurred, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition, operating results, and reputation.

Our sales to government entities are subject to a number of additional challenges and risks.

We sell to government customers, and we may increase sales to government entities in the future. Selling to government entities can be highly competitive, often requiring significant upfront time and expense without any assurance that these efforts will generate a

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sale. Government certification requirements may change, or we may lose one or more government certifications, and in doing so restrict our ability to sell into the government sector or maintain existing government customers until we attain revised certifications. Government demand and payment for our products and services are affected by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our solutions. For example, as a result of the COVID-19 pandemic, many governments and municipalities are experiencing budget shortfalls, which may cause them to delay or reduce their technology spending. Moreover, an extended federal government shutdown resulting from budgetary decisions may limit or delay federal government spending on our solutions and adversely affect our revenue. Government entities may also have statutory, contractual or other legal rights to terminate contracts with us for convenience or due to a default, and any such termination may adversely affect our future operating results.

As a substantial portion of our sales efforts are increasingly focused on cloud content management use cases and are targeted at enterprise and highly-regulated customers, our sales cycles may become longer and more expensive, we may encounter greater pricing pressure and implementation and customization challenges, and we may have to delay revenue recognition for more complicated transactions, all of which could harm our business and operating results.

As a substantial portion of our sales efforts are increasingly focused on cloud content management use cases and are targeted at enterprise and highly-regulated customers, we face greater costs, longer sales cycles and less predictability in the completion of some of our sales. In this market segment, the customer’s decision to use our services may be an enterprise-wide decision. These types of sales opportunities require us to provide greater levels of customer education regarding the uses and benefits of our services, as well as education regarding security, privacy, and data protection laws and regulations, especially for those customers in more heavily regulated industries or those with significant international operations. In addition, larger enterprises may demand more customization, integration, support services, and features. Furthermore, our sales efforts may be impeded by catastrophic events, including public health epidemics such as the COVID-19 pandemic, that limit our ability to travel or meet customers in person. These factors could increase our costs, lengthen our sales cycle and leave fewer sales support and professional services resources for other customers. Professional services may also be performed by a third party or a combination of our own staff and a third party. Our strategy is to work with third parties to increase the breadth of capability and depth of capacity for delivery of these services to our customers. If a customer is not satisfied with the quality or interoperability of our services with their own IT environment, we could incur additional costs to address the situation, which could adversely affect our margins. Moreover, any customer dissatisfaction with our services could damage our ability to encourage broader adoption of our services by that customer. In addition, any negative publicity resulting from such situations, regardless of its accuracy, may further damage our business by affecting our ability to compete for new business with current and prospective customers.

If we fail to meet the service level commitments we provide under our subscription agreements, we could be obligated to provide credits or refunds for prepaid amounts related to unused subscription services or face subscription terminations, which could adversely affect our revenue. Furthermore, any failure in our delivery of high-quality customer support services may adversely affect our relationships with our customers and our financial results.

Our customer subscription agreements provide service level commitments. If we are unable to meet our service level commitments or suffer periods of downtime that exceed the periods allowed under our customer agreements, we may be obligated to provide customers with service credits which could significantly impact our revenue in the period in which the downtime occurs and the credits could be due. For example, in 2019, a modification to a perimeter network configuration caused an internal routing problem that led to all Box services being temporarily unavailable. We could also face subscription terminations, which could significantly impact our current and future revenue. Any extended service outages could also adversely affect our reputation, which would also impact our future revenue and operating results.

Our customers depend on our customer success organization to resolve technical issues relating to our services. We may be unable to respond quickly enough to accommodate short-term increases in customer demand for support services. Increased customer demand for these services, without corresponding revenue, could increase costs and adversely affect our operating results. In addition, our sales process is highly dependent on the ease of use of our services, our reputation and positive recommendations from our existing customers. Any failure to maintain, or a market perception that we do not maintain, high-quality customer support could adversely affect our reputation and our ability to sell our services to existing and prospective customers.

We are in the process of expanding our international operations, which exposes us to significant risks.

A key element of our growth strategy is to expand our international operations and develop a worldwide customer base. In addition, we have opened, and may continue to open, international offices and hire employees to work at these offices in order to gain access to additional talent. For example, we recently established an office in Warsaw, Poland and acquired SignRequest B.V., a company located in The Netherlands. Operating in international markets requires significant resources and management attention and will subject us to regulatory, economic, geographic, social, and political risks that differ from those in the United States. Because of our limited experience with international operations and significant differences between international and U.S. markets, we may not

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succeed in creating demand for our services outside of the United States or in effectively selling our services in all of the international markets we enter. In addition, we will face specific risks in doing business internationally that could adversely affect our business, including:

• the need to localize and adapt our services for specific countries, including translation into foreign languages and associated expenses;

• laws (and changes to such laws) relating to privacy, data protection and data transfer that, among other things, could require that customer data be stored and processed in a designated territory;

• difficulties in staffing and managing foreign operations;

• different pricing environments, longer sales cycles and longer accounts receivable payment cycles and collections issues;

• new and different sources of competition;

• weaker protection for intellectual property and other legal rights than in the United States and practical difficulties in enforcing intellectual property and other rights outside of the United States;

• laws and business practices favoring local competitors, including economic tariffs;

• changes in the geopolitical environment, the perception of doing business with U.S. based companies, and changes in regulatory requirements that impact our operating strategies, access to global markets or hiring;

• compliance challenges related to the complexity of multiple, conflicting and changing governmental laws and regulations, including employment, tax, privacy and data protection laws and regulations;

• increased financial accounting and reporting burdens and complexities;

• restrictions on the transfer of funds;

• reliance on third-party resellers and other parties;

• adverse tax consequences; and

• unstable regional, economic, social and political conditions.

We sell our services and incur operating expenses in various currencies. Therefore, fluctuations in the relative value of the U.S. dollar and foreign currencies may impact our operating results. We currently manage our exchange rate risk by matching foreign currency assets with payables and by maintaining minimal non-U.S. dollar cash reserves, but we do not have any other hedging programs in place to limit the risk of exchange rate fluctuation. In the future, however, to the extent our foreign currency exposures become more material, we may elect to deploy normal and customary hedging practices designed to more proactively mitigate such exposure. We cannot be certain such practices will ultimately be available and/or effective at mitigating all foreign currency risk to which we are exposed. If we are unsuccessful in detecting material exposures in a timely manner, our deployed hedging strategies are not effective, or there are no hedging strategies available for certain exposures that are prudent given the associated risks and the potential mitigation of the underlying exposure achieved, our operating results or financial position could be adversely affected in the future.

In addition, the United Kingdom’s (UK) withdrawal from the European Union (EU), or Brexit, became effective on January 31, 2020. The UK and EU have signed an EU-UK Trade and Cooperation Agreement, which became provisionally applicable on January 1, 2021 and will become formally applicable once ratified by the UK and EU. This agreement provides details on how some aspects of the UK and EU’s relationship will operate going forward, however there continues to be uncertainty over the practical consequences of Brexit. Many of the regulations that now apply in the UK will likely be amended in the future as the UK determines its new approach, which may result in significant divergence from EU regulations. This lack of clarity could lead to economic and legal uncertainty, including significant volatility in global stock markets and currency exchange rates, among other things. Any of these effects of Brexit, among others, could adversely affect our operations, especially in the United Kingdom, and our financial results.

If we are unable to maintain and promote our brand, our business and operating results may be harmed.

We believe that maintaining and promoting our brand is critical to expanding our customer base. Maintaining and promoting our brand will depend largely on our ability to continue to provide useful, reliable and innovative services, which we may not do successfully. We may introduce new features, products, services or terms of service that our customers do not like, which may negatively affect our brand and reputation. Additionally, the actions of third parties may affect our brand and reputation if customers do not have a positive experience using third-party apps or other services that are integrated with Box. Maintaining and enhancing our brand may require us to make substantial investments, and these investments may not achieve the desired goals. If we fail to successfully promote and maintain our brand or if we incur excessive expenses in this effort, our business and operating results could be adversely affected.

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We have a history of cumulative losses, and we may not be able to achieve or maintain profitability.

We incurred net losses of $43.4 million, $144.3 million, and $134.6 million in our fiscal years ended January 31, 2021, 2020 and 2019, respectively and $14.6 million in the three months ended April 30, 2021. As of April 30, 2021, we had an accumulated deficit of $1.3 billion. These losses and accumulated deficit reflect the substantial investments we made to acquire new customers and develop our services. We intend to continue scaling our business to increase our number of users and paying organizations and to meet the increasingly complex needs of our customers. We have invested, and expect to continue to invest, in our sales and marketing organizations to sell our services around the world and in our product development organization to deliver additional features and capabilities of our cloud services to address our customers’ evolving needs. We also expect to continue making significant investments in our infrastructure and in our professional service organization as we focus on customer success. Furthermore, to the extent we are successful in increasing our customer base, we will also incur increased losses due to upfront costs associated with acquiring new customers, including as a result of the limited free trial version of our service, and the nature of subscription revenue, which is generally recognized ratably over the term of the subscription period, which we offer for terms ranging from one month to three years or more. As a result, we cannot assure you that we will achieve profitability in the future or that, if we do become profitable, we will sustain profitability.

Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business.

Our quarterly operating results may vary significantly in the future, and period-to-period comparisons of our operating results may not be meaningful. Accordingly, the results of any one quarter should not be relied upon as an indication of future performance. Our quarterly financial results may fluctuate as a result of a variety of factors, and as a result, may not fully reflect the underlying performance of our business. Factors that may cause fluctuations in our quarterly financial results include, but are not limited to:

• our ability to attract and retain new customers;

• our ability to convert users of our limited free version to paying customers;

• the addition or loss of large customers, including through acquisitions or consolidations;

• changes in our net retention rate;

• the timing of revenue recognition;

• the impact on billings of customer shifts between payment frequencies;

• the amount and timing of operating expenses related to the maintenance and expansion of our business, operations and infrastructure;

• network or service outages, internet disruptions, disruptions to the availability of our service, security breaches or perceived security breaches and vulnerabilities;

• general economic, industry and market conditions, including those caused by the COVID-19 pandemic;

• changes in our go-to-market strategies and/or pricing policies and/or those of our competitors;

• seasonal variations in our billings results and sales of our services, which have historically been highest in the fourth quarter of our fiscal year;

• the timing and success of new services and product introductions by us and our competitors or any other change in the competitive dynamics of our industry, including consolidation or new entrants among competitors, customers or strategic partners;

• changes in usage or adoption rates of content management services;

• the success of our strategic partnerships, including the performance of our resellers; and

• the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill from acquired companies.

Risks Related to Data Privacy and Data Security

Privacy concerns and laws or other regulations may reduce the effectiveness of our services and harm our business.

Users can use our services to store identifying information or information that otherwise is considered personal information. Federal, state and foreign government bodies and agencies have adopted or are considering adopting laws and regulations regarding the collection, use and disclosure of personal information obtained from consumers, businesses and other individuals and entities. Data protection, privacy, consumer protection and other laws and regulations, particularly in Europe, are often more restrictive than those in

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the United States. The costs of compliance with, and other burdens imposed by, such laws, policies and regulations that apply to our business or our customers’ businesses may limit the use and adoption of our services and reduce overall demand for them.

These laws and regulations, which may be enforceable by private parties and/or governmental entities, are constantly evolving and can be subject to significant change. A number of new laws coming into effect and/or proposals pending before federal, state and foreign legislative and regulatory bodies could affect our business. For example, the European Commission enacted the General Data Protection Regulation (GDPR), which imposes significant obligations on companies regarding the handling of personal data and provides for penalties for noncompliance of up to the greater of 20 million euros or four percent of a company’s global revenue. Further, local data protection authorities in Europe may adopt regulations and/or guidance more stringent than the GDPR, which may impose additional compliance costs or other burdens that impact our business. In 2020, the Court of Justice of the European Union (CJEU) invalidated the EU-US Privacy Shield framework, and imposed additional obligations on companies when relying on model contractual clauses approved by the European Commission (EC) to transfer personal data from the EU to the U.S. This CJEU decision may result in the EC and European data protection regulators applying differing standards for, and requiring ad hoc verification of, transfers of personal data from the EU to the U.S. The CJEU’s decision may require us to take additional steps to legitimize any personal data transfers that are impacted by this decision, which may result in increased costs of compliance and limitations on our customers and us. This CJEU decision or other legal challenges relating to cross-border data transfers may serve as a basis for challenges to our personal data handling practices, or those of our customers, and may otherwise adversely impact our business, financial condition and operating results.

Brexit has created uncertainty around data protection issues and could lead to further legislative and regulatory changes. For example, pursuant to a post-Brexit trade deal between the UK and the EU, transfers of personal information from the European Economic Area (EEA) to the UK are non-restricted for a period of up to six months from January 1, 2021. However, unless the EC makes an adequacy decision with respect to the UK before the end of that period, the UK will be considered a “third country” under the GDPR and transfers of European personal information to the UK will require additional safeguard as stipulated by Chapter 5 of the GDPR to render such transfers lawful. Additionally, the UK Data Protection Act of 2018 substantially implements the GDPR in the UK and was the subject of statutory amendments that further aligned it with the GDPR in 2019. It remains unclear, however, how the UK’s data protection laws or regulations will develop in the medium to longer term and how data transfers to and from the United Kingdom will be regulated.

In 2018, the State of California enacted the California Consumer Privacy Act (CCPA), that became operative on January 1, 2020. The CCPA requires covered companies to, among other things, provide new disclosures to California consumers, and afford such consumers new abilities to opt-out of certain sales of personal information. Additionally, a new privacy law, the California Privacy Rights Act (CPRA), was approved by California voters in November 2020. The CPRA’s substantive provisions become effective on January 1, 2023, and new guidance and supporting regulations are expected to be introduced by July 1, 2022. The CPRA will replace the CCPA and may potentially result in further uncertainty and require us to incur additional costs and expenses. Aspects of the interpretation and enforcement of the CCPA and CPRA remain unclear. We cannot fully predict the impact of the CCPA and CPRA on our business or operations, but they may require us to modify our data processing practices and policies and incur substantial costs and expenses in an effort to comply. There also have been a number of other recent legislative proposals in the United States, at both the federal and state level, that would impose new obligations in areas such as privacy and liability for copyright infringement by third parties.  

In addition, some countries are considering or have enacted legislation requiring local storage and processing of data that could increase the cost and complexity of delivering our services. If we are unable to develop and offer services that meet our legal duties or help our customers meet their obligations under the laws or regulations relating to privacy, data protection, or information security, we may become subject to significant fines and penalties, which would harm our business. 

Moreover, these existing and proposed laws and regulations can be costly to comply with, delay or impede the development or adoption of our products and services, reduce the overall demand for our products and services, increase our operating costs, require significant management time and attention, and slow the pace at which we close (or prevent us from closing) sales transactions. Additionally, any actual or alleged noncompliance with these laws and regulations could result in negative publicity and subject us to investigations, claims or other remedies, including demands that we modify or cease existing business practices, and expose us to significant fines, penalties and other damages.

Furthermore, government agencies may seek to access sensitive information that our users upload to Box, or restrict users’ access to Box. Laws and regulations relating to government access and restrictions are evolving, and compliance with such laws and regulations could limit adoption of our services by users and create burdens on our business. Moreover, regulatory investigations into our compliance with privacy-related laws and regulations could increase our costs and divert management attention.

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If we are not able to satisfy data protection, security, privacy, and other government- and industry-specific requirements, our growth could be harmed.

There are a number of data protection, security, privacy and other government- and industry-specific requirements, including those that require companies to notify individuals of data security incidents involving certain types of personal data. Security compromises experienced by our competitors, by our customers or by us may lead to public disclosures, which could harm our reputation, erode customer confidence in the effectiveness of our security measures, negatively impact our ability to attract new customers, or cause existing customers to elect not to renew their agreements with us. Our customers also expect, and in some instances require, us to meet voluntary certifications or adhere to standards established by third parties. Although we currently have certain certifications such as ISO/IEC 27001, 27017, and 27018, we may not be successful in continuing to maintain those certifications or in obtaining other certifications. In addition, some of the industries we serve have industry-specific requirements relating to compliance with certain security and regulatory standards, such as GxP and FedRAMP, and those required by HIPAA, FINRA, and the HITECH Act. As we expand into new industries and regions, we will likely need to comply with these and other new requirements to compete effectively. If we cannot adequately comply with these requirements, our growth could be adversely impacted, and we could incur significant liability and our reputation and business could be harmed.

Risks Related to Our Technical Operations Infrastructure and Dependence on Third Parties

If we are unable to ensure that our solutions interoperate with operating systems and software applications developed by others, our service may become less competitive, and our operating results may be harmed.

We offer our services across a variety of operating systems and through the internet. We are dependent on the interoperability of our platform with third-party mobile devices, tablets, desktop and mobile operating systems, as well as web browsers that we do not control. Any changes in such systems, devices or web browsers that degrade the functionality of our services or give preferential treatment to competitive services could adversely affect usage of our services and our ability to deliver high quality services. We may not succeed in developing relationships with key participants in the mobile industry or in developing services that operate effectively with these operating systems, networks, infrastructure, devices, web browsers and standards. In the event that our users experience difficulty accessing and using our services, our user growth may be harmed, and our business and operating results could be adversely affected.

If we fail to effectively manage our technical operations infrastructure, our customers may experience service outages and delays in the deployment of our services, which may adversely affect our business.

We have experienced significant growth in the number of users and the amount of data that our operations infrastructure supports. We seek to maintain sufficient excess capacity in our operations infrastructure to meet our customers’ needs. We also seek to maintain excess capacity to facilitate the rapid provisioning of new customer deployments and the expansion of existing customer deployments. In addition, we need to properly manage our technological operations infrastructure in order to support version control, changes in hardware and software parameters and the evolution of our services. However, the provision of new hosting infrastructure requires significant lead-time. We have experienced, and may in the future experience, website disruptions, incidents of data corruption, service outages and other performance problems. These problems may be caused by a variety of factors, including infrastructure changes, changes to our core services architecture, changes to our infrastructure necessitated by legal and compliance requirements governing the storage and transmission of data, human or software errors, viruses, security attacks, fraud, spikes in customer usage, primary and redundant hardware or connectivity failures, dependent data center and other service provider failures and denial of service issues. Additionally, our ability to properly manage our technical operations infrastructure depends on the reliability of the global supply chain for hardware, network, and platform infrastructure equipment. Significant and unforeseen disruptions to the supply chain may impede our ability to meet our infrastructure capacity requirements. In some instances, we may not be able to identify the cause or causes of these performance problems within an acceptable period of time, which may harm our reputation and operating results. Furthermore, if we encounter any of these problems in the future, our customers may lose access to important data or experience data corruption or service outages that may subject us to financial penalties, other liabilities and customer losses. If our operations infrastructure fails to keep pace with increased sales, customers may experience delays as we seek to obtain additional capacity, which could adversely affect our reputation and our business.

Interruptions or delays in service from our third-party data center hosting facilities and cloud computing and hosting providers could impair the delivery of our services and harm our business.

We currently store and process our customers’ information within multiple third-party data center hosting facilities located in Nevada and in third-party cloud computing and hosting facilities inside and outside of the United States. As part of our disaster recovery arrangements, our production environment and metadata related to our customers’ data is currently replicated in near real time in facilities located in Nevada. In addition, all of our customers’ data is typically replicated on third-party storage platforms located inside and outside of the United States. These facilities may be located in areas prone to natural disasters and may experience

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events such as earthquakes, floods, fires, power loss, telecommunications failures and similar events. They may also be subject to break-ins, sabotage, intentional acts of vandalism, cyber-attacks and similar misconduct, including by state-sponsored or otherwise well-funded actors. Any damage to, or failure of, our systems generally, or those of the third-party cloud computing and hosting providers, could result in interruptions in our service, which may reduce our revenue, cause us to issue credits or pay penalties, cause customers to terminate their subscriptions and adversely affect our renewal rate and our ability to attract new customers. In addition, we may not have adequate insurance coverage to compensate for losses from a major interruption. Our business will also be harmed if our customers and potential customers believe our service is unreliable. Despite precautions taken at our third-party data center hosting facilities, the occurrence of disasters, security issues (including an act of terrorism or an armed conflict), certain geopolitical events, labor or trade disputes, or pandemics (such as COVID-19), could lead to a decision to close the facilities without adequate notice or other unanticipated problems that result in lengthy interruptions in our service or cause us to not comply with certification requirements. Even with the disaster recovery arrangements, we have never performed a full live failover of our services and, in an actual disaster, we could learn our recovery arrangements are not sufficient to address all possible scenarios and our service could be interrupted for a longer period than expected. For example, in 2019, a modification to a perimeter network configuration caused an internal routing problem which led to all Box services being temporarily unavailable. As we continue to add data centers, increase our dependence on third-party cloud computing and hosting providers, and add capacity in our existing data centers, we may move or transfer our data and our customers’ data. Despite precautions taken during any of these data center moves and data transfers, any unsuccessful data transfers may impair the delivery of our service and materially and adversely disrupt our operations and our service delivery to our customers, which could result in contractual penalties or damage claims from customers. In addition, changes to our data center infrastructure could occur over a period longer than planned, require greater than expected investment and other internal and external resources and cause us to incur increased costs as we operate multiple data center facilities. It may also take longer than expected to realize the intended benefits from any data center infrastructure migrations and improvements, and disruptions or unexpected costs may continue to occur while we enhance our data center infrastructure.

Our services are becoming increasingly mission-critical for our customers and if these services fail to perform properly or if we are unable to scale our services to meet our customers’ needs, our reputation could be adversely affected, our market share could decline and we could be subject to liability claims.

Our services are becoming increasingly mission-critical to our customers’ business operations, as well as their ability to comply with legal requirements, regulations, and standards such as GxP, FINRA, HIPAA, and FedRAMP. These services and offerings are inherently complex and may contain material defects or errors that could cause interruptions in the availability of our services, as well as user error, which could result in loss or delayed market acceptance and sales, breach of contract or warranty claims, issuance of sales credits or refunds for prepaid amounts related to unused subscription services, loss of customers, diversion of development and customer service resources, and harm to our reputation. The costs incurred in correcting any material defects or errors might be substantial and could adversely affect our operating results. Further, our errors and omissions insurance may be inadequate or may not be available in the future on acceptable terms, or at all. In addition, our insurance may not cover all claims made against us and defending a lawsuit, regardless of its merit, could be costly and divert management’s attention.

Because of the large amount of data that we collect and manage, it is possible that hardware failures, software errors, errors in our systems, or by third-party service providers, user errors, or internet outages could result in significant data loss or corruption. Furthermore, the availability or performance of our services could be adversely affected by a number of factors, including customers’ inability to access the internet, the failure of our network or software systems, security breaches or variability in customer traffic for our services. We have been, and in the future may be, required to issue credits or refunds for prepaid amounts related to unused services or otherwise be liable to our customers for damages they may incur resulting from some of these events.

Furthermore, we will need to ensure that our services can scale to meet the needs of our customers, particularly as we continue to focus on larger enterprise customers. If we are not able to provide our services at the scale required by our customers, potential customers may not adopt our solution and existing customers may not renew their agreements with us.

We rely on third parties for certain financial and operational services essential to our ability to manage our business. A failure or disruption in these services could materially and adversely affect our ability to manage our business effectively.

We rely on third parties for certain essential financial and operational services. Most of these services have traditionally been provided by large enterprise software vendors who license their software to customers. However, we receive many of these services on a subscription basis from various software-as-a-service companies that are smaller and have shorter operating histories than traditional software vendors. Moreover, these vendors provide their services to us via a cloud-based model instead of software that is installed on our premises. We depend upon these vendors to provide us with services that are always available and are free of errors or defects that could cause disruptions in our business processes, and any failure by these vendors to do so, or any disruptions in networks or the availability of the internet, would adversely affect our ability to operate and manage our operations.

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We employ third-party software for use in or with our services, and the inability to maintain licenses to this software, or errors in the software, could result in increased costs, or reduced service levels, which would adversely affect our business.

Our services incorporate certain third-party software obtained under open source licenses or licenses from other companies. We anticipate that we will continue to rely on such third-party software and development tools in the future. Although we believe that there are commercially reasonable alternatives to the third-party software we currently license, this may not always be the case, or it may be difficult or costly to replace. In addition, integration of the software used in our services with new third-party software may require significant work and require substantial investment of our time and resources. Also, to the extent that our services depend upon the successful operation of third-party software in conjunction with our software, any undetected errors or defects in this third-party software could prevent the deployment or impair the functionality of our services, delay the introduction of new services, result in a failure of our services, and injure our reputation. For example, we discovered that a bug in a third-party software library we use in our services caused a very small subset of files uploaded during a short period of time (from mid-December 2017 to early January 2018) to be stored in a partially-corrupted state. Our use of additional or alternative third-party software would require us to enter into additional license agreements with third parties. If we are unable to maintain licenses to software necessary to operate our business, or if third-party software that we use contains errors or defects, our costs may increase, or the services we provide may be harmed, which would adversely affect our business.

Our growth depends in part on the success of our strategic relationships with third parties.

In order to grow our business, we anticipate that we will continue to depend on our relationships with third parties, such as alliance partners, resellers, distributors, system integrators and developers. For example, we have entered into agreements with partners such as IBM, Microsoft, Google, Macnica Networks, and Mitsui Knowledge Industry to market, resell, integrate with or endorse our services. Identifying partners and resellers, and negotiating and documenting relationships with them, requires significant time and resources.

We also depend on our ecosystem of system integrators, partners and developers to create applications that will integrate with our platform or permit us to integrate with their product offerings. This presents certain risks to our business, including:

• we cannot provide any assurance that these third-party applications and products meet the same quality standards that we apply to our own development efforts, and to the extent that they contain bugs or defects or otherwise fail to perform as expected, they may create disruptions in our customers’ use of our services or negatively affect our brand and reputation;

• we do not currently provide support for software applications developed by our partner ecosystem, and users may be left without support and potentially cease using our services if these system integrators and developers do not provide adequate support for their applications;

• we cannot provide any assurance that we will be able to successfully integrate our services with our partners’ products or that our partners will continue to provide us the right to do so; and

• these system integrators, partners and developers may not possess the appropriate intellectual property rights to develop and share their applications.

In addition, our competitors may be effective in providing incentives to third parties to favor their products or services, or to prevent or reduce subscriptions to our services. In some cases, we also compete directly with our partners’ product offerings, and if these partners stop reselling or endorsing our services or impede our ability to integrate our services with their products, our business and operating results could be adversely affected. Moreover, competitor acquisitions of our partners could result in a decrease in the number of current and potential customers, as our partners may no longer facilitate the adoption of our services by potential customers.

If we are unsuccessful in establishing or maintaining our relationships with third parties, or realizing the anticipated benefits from such partnerships, our ability to compete in the marketplace or to grow our revenue could be impaired and our operating results may suffer. Even if we are successful, we cannot assure you that these relationships will result in increased customer usage of our services or increased revenue.

Our business is subject to the risks of natural disasters, pandemics and other catastrophic events that could disrupt our business operations and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.

The occurrence of any catastrophic event, including a pandemic (such as COVID-19), earthquake, fire, flood, tsunami, or other weather event, power loss, telecommunications failure, software or hardware malfunctions, cyber-attack, war, or terrorist attack, could result in lengthy interruptions in our service. Our corporate headquarters is located in the San Francisco Bay Area, a region known for seismic activity. Our insurance coverage may not compensate us for losses that may occur in the event of an earthquake or other

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significant natural disaster. In addition, pandemics, acts of terrorism or war could cause disruptions to the internet or the economy as a whole, which could have a significant impact on our business and operating results. If our or our partners’ business continuity and disaster recovery arrangements prove to be inadequate, our services could be interrupted. Our partners, suppliers, and customers are also subject to the risk of catastrophic events. In those events, our ability to deliver our services in a timely manner, as well as the demand for our services, may be adversely impacted by factors outside our control.  If our systems were to fail or be negatively impacted as a result of a natural disaster, pandemic or other catastrophic event, our ability to deliver our services to our customers would be impaired, we could lose critical data, our reputation could suffer and we could be subject to contractual penalties.

If we overestimate or underestimate our data center capacity requirements, our operating results could be adversely affected.

We continuously evaluate our short- and long-term data center capacity requirements to ensure adequate capacity for new and existing customers while minimizing unnecessary excess capacity costs. If we overestimate the demand for our cloud content management services and therefore secure excess data center capacity, or if we are unable to meet our contractual minimum commitments, our operating margins could be reduced. If we underestimate our data center capacity requirements, we may not be able to service the expanding needs of customers and may be required to limit new customer acquisition, which would impair our revenue growth. Furthermore, regardless of our ability to appropriately manage our data center capacity requirements, only a small percentage of our customers currently use Box to organize all of their internal files, and an increase in the number of organizations, in particular large businesses and enterprises, that use our service as a larger component of their content storage requirements, could result in lower gross and operating margins or otherwise have an adverse impact on our financial condition and operating results.

Changes in laws and regulations related to the internet or changes in the internet infrastructure itself, or disruption in access to the internet or critical services on which the internet depends, may diminish the demand for our services, and could have a negative impact on our business.

The future success of our business depends upon the continued use and availability of the internet as a primary medium for commerce, communication and business services. Federal, state or foreign government bodies or agencies have in the past adopted, and may in the future adopt, laws or regulations affecting the use of the internet as a commercial medium. The adoption of any laws or regulations that adversely affect the growth, popularity or use of the internet, including laws or practices limiting internet neutrality, could decrease the demand for, or the usage of, our services, increase our cost of doing business, adversely affect our operating results, and require us to modify our services in order to comply with these changes. In addition, government agencies or private organizations may begin to impose taxes, fees or other charges for accessing the internet or commerce conducted via the internet. These laws or charges could limit the growth of internet-related commerce or communications generally, or result in reductions in the demand for internet-based services such as ours.

In addition, the use of the internet and, in particular, the cloud as a business tool could be adversely affected due to delays in the development or adoption of new standards and protocols to handle increased demands of internet activity, security, reliability, cost, ease of use, accessibility, and quality of service. The performance of the internet and its acceptance as a business tool have been adversely affected by “viruses,” “worms,” “denial of service attacks” and similar malicious activity. The internet has also experienced a variety of outages, disruptions and other delays as a result of this malicious activity targeted at critical internet infrastructure. These service disruptions could diminish the overall attractiveness to existing and potential customers of services that depend on the internet and could cause demand for our services to suffer.

Risks Related to Employees and Managing Our Growth

We depend on highly skilled personnel to grow and operate our business, and if we are unable to hire, retain and motivate our personnel, we may not be able to grow effectively.

Our future success depends upon our continued ability to identify, hire, develop, motivate and retain highly skilled personnel, representing diverse backgrounds, experiences, and skill sets, including senior management, engineers, designers, product managers, sales representatives, and customer support representatives. Identifying, recruiting, training and integrating qualified individuals will require significant time, expense and attention. In addition to hiring new employees, we must continue to focus on retaining our best employees, and fostering a diverse and inclusive work environment that enables all of our employees to prosper. Competition for highly skilled personnel is intense, particularly in the San Francisco Bay Area, where our headquarters is located. Moreover, our ability to attract and hire personnel may be materially adversely affected by changes to immigration laws or the availability of work visas. We may need to invest significant amounts of cash and equity to attract and retain new employees, and we may never realize returns on these investments. If we are not able to effectively add and retain employees, our ability to achieve our strategic objectives will be adversely impacted, and our business will be harmed.

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Our success is also dependent upon contributions from our executive officers and other key employees and, in particular, Aaron Levie, our co-founder and Chief Executive Officer. There may be changes in our senior management team that could disrupt our business. The loss of one or more of our executive officers or key employees, or the failure of our senior management team to work together effectively and execute our plans and strategies, could harm our business.

Failure to adequately expand and optimize our direct sales force and successfully maintain our online sales experience could impede our growth.

We will need to continue to optimize our sales infrastructure in order to grow our customer base and business. As a result of the COVID-19 pandemic, we are temporarily requiring nearly all of our employees to work remotely and restricting business travel, which may negatively impact our ability to recruit and train our sales force. Our business may be adversely affected if our efforts to expand and train our direct sales force do not generate a corresponding increase in revenue. If we are unable to hire, develop and retain talented sales personnel or if new direct sales personnel are unable to achieve desired productivity levels in a reasonable period of time, we may not realize the intended benefits of this investment or increase our revenue.

We maintain our Box website to efficiently service our high volume, low dollar customer transactions and certain customer inquiries. Our goal is to continue to evolve this online experience so it effectively serves the increasing and changing needs of our growing customer base. If we are unable to maintain an effective online solution to meet the future needs of our online customers and to eliminate fraudulent transactions occurring in this channel, we could see reduced online sales volumes as well as a decrease in our sales efficiency, which could adversely affect our results of operations.

Any acquisitions and investments we make could disrupt our business and harm our financial condition and operating results.

We have acquired, and may in the future acquire, other companies, employee teams, or technologies to complement or expand our services and grow our business. For example, in February 2021 we acquired SignRequest. We may not be able to successfully complete or integrate identified acquisitions. Moreover, we may not successfully evaluate or utilize the acquired technology or personnel, or accurately forecast the financial impact of an acquisition. The risks we face in connection with acquisitions include:

• diversion of management time and focus from operating our business to addressing acquisition integration challenges;

• coordination of research and development and sales and marketing functions;

• retention of key employees from the acquired company;

• cultural challenges associated with integrating employees from the acquired company into our organization;

• integration of the acquired company’s technology and products into our business, particularly if the acquired company’s software and services are not easily adapted to work with our products;

• integration of the acquired company’s accounting, management information, human resources and other administrative systems, as well as the acquired operations, and any unanticipated expenses related to such integration;

• the need to implement or improve controls, procedures, and policies at a business that prior to the acquisition may have lacked effective controls, procedures and policies;

• liability for activities of the acquired company before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities;

• completing the transaction and achieving the anticipated benefits of the acquisition within the expected timeframe or at all;

• unanticipated write-offs, expenses, charges or risks associated with the transaction;

• litigation or other claims in connection with the acquired company, including claims from terminated employees, customers, former stockholders or other third parties, which may differ from or be more significant than the risks our business faces; and

• acquisitions could result in dilutive issuances of equity securities or the incurrence of debt.

Our failure to address these risks or other problems encountered in connection with our past or future acquisitions and investments could cause us to fail to realize the anticipated benefits of these acquisitions or investments, cause us to incur unanticipated liabilities, and harm our business generally. Future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses, incremental operating expenses or the write-off of goodwill, any of which could harm our financial condition or operating results.

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Our company culture has contributed to our success, and if we cannot maintain this culture as we grow, we could lose the innovation, creativity and teamwork fostered by our culture, and our business may be harmed.

We believe that our culture has been and will continue to be a key contributor to our success. We expect to continue to hire additional employees as we expand our business. If we do not continue to develop our company culture or maintain our core values as we grow and evolve both in the United States and abroad, we may be unable to foster the innovation, creativity and teamwork we believe we need to support our growth.

Risks Related to Our Intellectual Property

We may be sued by third parties for alleged infringement of their proprietary rights.

There is considerable patent and other intellectual property development activity in our industry. Our success depends on our not infringing upon the valid intellectual property rights of others. Our competitors, as well as a number of other entities, including non-practicing entities, and individuals, may own or claim to own intellectual property relating to our industry.

From time to time, third parties have claimed and in the future may claim that we are infringing upon their intellectual property rights, and we may be found to be infringing upon such rights. We may be unaware of the intellectual property rights that others may claim cover some or all of our technology or services. Any claims or litigation could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial damages or ongoing royalty payments, prevent us from offering our services, or require that we comply with other unfavorable terms. We may also be obligated to indemnify our customers or business partners or pay substantial settlement costs, including royalty payments, in connection with any such claim or litigation and to obtain licenses, modify services, or refund fees, which could be costly. Even if we were to prevail in such a dispute, any litigation regarding our intellectual property could be costly and time consuming and divert the attention of our management and key personnel from our business operations. During the course of any litigation, we may make announcements regarding the results of hearings and motions, and other interim developments. If securities analysts or investors regard these announcements as negative, the market price of our Class A common stock may decline.

Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and brand.

Our success and ability to compete depend in part on our intellectual property. We primarily rely on copyright, patent, trade secret and trademark laws, trade secret protection and confidentiality or license agreements with our employees, customers, partners and others to protect our intellectual property rights. However, the steps we take to protect our intellectual property rights may be inadequate. We may not be able to obtain any further patents, and our pending applications may not lead to the issuance of patents. We may also have to expend significant resources to obtain additional patents as we expand our international operations.

In order to protect our intellectual property rights, we may spend significant resources to monitor and protect these rights. Litigation brought to protect and enforce our intellectual property rights could be costly, time-consuming and distracting to management and may result in the impairment or loss of portions of our intellectual property. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights. Accordingly, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property. Our failure to secure, protect and enforce our intellectual property rights could materially adversely affect our brand and adversely impact our business.

Our services contain open source software, and we license some of our software through open source projects, which may pose particular risks to our proprietary software, products, and services in a manner that could have a negative impact on our business.

We use open source software in our services and will use open source software in the future. In addition, we regularly contribute software source code to open source projects under open source licenses or release internal software projects under open source licenses, and anticipate doing so in the future. The terms of many open source licenses to which we are subject have not been interpreted by U.S. or foreign courts, and there is a risk that open source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to provide or distribute our services. Additionally, we may from time to time face claims from third parties claiming ownership of, or demanding release of, the open source software or derivative works that we developed using such software, which could include our proprietary source code, or otherwise seeking to enforce the terms of the applicable open source license. These claims could result in litigation and could require us to make our software source code freely available, purchase a costly license or cease offering the implicated services unless and until we can re-engineer them to avoid infringement. This re-engineering process could require significant additional research and development resources, and we may not be able to complete it successfully. In addition to risks related to license requirements, use of certain open source software can lead to greater risks than use of third-party commercial software, as open source code may contain bugs or other defects and open source licensors generally do not provide warranties or controls on the functionality or origin of software. Additionally, because any software

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source code we contribute to open source projects is publicly available, our ability to protect our intellectual property rights with respect to such software source code may be limited or lost entirely, and we cannot prevent our competitors or others from using such contributed software source code. Any of these risks could be difficult to eliminate or manage and could have a negative effect on our business, financial condition and operating results.

Risks Related to Our Financial Position and Need for Additional Capital

We may require additional capital to support our operations or the growth of our business, and we cannot be certain that this capital will be available on reasonable terms when required, or at all.

On occasion, we may need additional financing for a variety of reasons, including operating or growing our business, responding to business opportunities, undertaking acquisitions, or repaying our convertible senior notes. Our ability to obtain additional financing, if and when required, will depend on investor and lender demand, our operating performance, the condition of the capital markets and other factors. We cannot guarantee that additional financing will be available to us on favorable terms when required, or at all. If we raise additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to the rights of our Class A common stock, and our existing stockholders may experience dilution. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support the operation or growth of our business could be significantly impaired and our operating results may be harmed.

Financing agreements we are party to or may become party to may contain operating and financial covenants that restrict our business and financing activities.

Our senior credit facility contains certain operating and financial restrictions and covenants that may restrict our and our subsidiaries’ ability to, among other things, incur indebtedness, grant liens on our assets, make loans or investments, consummate certain merger and consolidation transactions, dispose of assets, incur contractual obligations and commitments and enter into affiliate transactions, subject in each case to customary exceptions. We are also required to comply with a minimum liquidity covenant and a maximum leverage ratio. These restrictions and covenants, as well as those contained in any future financing agreements that we may enter into, may restrict our ability to finance our operations, engage in, expand or otherwise pursue our business activities and strategies. Our ability to comply with these covenants may be affected by events beyond our control, and breaches of these covenants could result in a default under the senior credit facility and any future financial agreements that we may enter into and under other arrangements containing cross-default provisions. If not waived, defaults could cause our outstanding indebtedness under our senior credit facility and any future financing agreements that we may enter into to become immediately due and payable, and permit our lenders to terminate their lending commitments and to foreclose upon any collateral securing such indebtedness.

Risks Related to Financial, Accounting, Tax and Other Legal Matters

If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.

As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, the Sarbanes-Oxley Act and the listing standards of the New York Stock Exchange (NYSE). We expect that compliance with these rules and regulations will continue to increase our legal, accounting and financial compliance costs, make some activities more difficult, time consuming and costly, and place significant strain on our personnel, systems and resources.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures, and internal control over financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file with the SEC is properly recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. We are also continuing to improve our internal control over financial reporting. We have expended, and anticipate that we will continue to expend, significant resources in order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting.

Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business, including increased complexity resulting from our international expansion. Further, weaknesses in our disclosure controls or our internal control over financial reporting may be discovered in the future. Additionally, to the extent that we acquire other businesses, the acquired company may not have a sufficiently robust system of internal controls and we may uncover new deficiencies. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting could also adversely affect the results of management reports and independent registered public accounting firm audits of our internal control over financial reporting that we are required to include in our periodic reports that we file with the SEC. Ineffective disclosure

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controls and procedures, and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the market price of our Class A common stock. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the NYSE.

Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on our business and operating results, and cause a decline in the market price of our Class A common stock.

Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.

Generally accepted accounting principles in the United States are subject to interpretation by the FASB, the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported financial results, and could affect the reporting of transactions completed before the announcement of a change. In addition, were we to change our critical accounting estimates, including the timing of recognition of subscription revenue and other revenue sources, our results of operations could be significantly impacted. These or other changes in accounting principles could adversely affect our financial results. Any difficulties in implementing these pronouncements could cause us to fail to meet our financial reporting obligations, which could result in regulatory discipline and harm investors’ confidence in us.

Tax laws or regulations could be enacted or changed and existing tax laws or regulations could be applied to us or to our customers in a manner that could increase the costs of our services and adversely impact our business.

The application of federal, state, local and international tax laws to services provided electronically is unclear and continuously evolving. Income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted or amended at any time, such as the Tax Cuts and Jobs Act in the United States, possibly with retroactive effect, and could be applied solely or disproportionately to services provided over the internet. These enactments or amendments could adversely affect our sales activity due to the inherent cost increase the taxes would represent and ultimately result in a negative impact on our operating results and cash flows.

In addition, existing tax laws, statutes, rules, regulations or ordinances could be interpreted or applied adversely to us, possibly with retroactive effect, which could require us or our customers to pay additional tax amounts, as well as require us or our customers to pay fines or penalties, as well as interest for past amounts. If we are unsuccessful in collecting such taxes due from our customers, we could be held liable for such costs, thereby adversely impacting our operating results and cash flows.

We may be subject to additional tax liabilities.

We are subject to income, sales, use, value added and other taxes in the United States and other countries in which we conduct business, and such laws and rates vary by jurisdiction. Our income tax obligations are based in part on our corporate structure and intercompany arrangements, including the manner in which we acquire, develop, value, and use our intellectual property and the valuations of our intercompany transactions. Certain jurisdictions in which we do not collect sales, use, value added or other taxes on our sales may assert that such taxes are applicable, which could result in tax assessments, penalties and interest, and we may be required to collect such taxes in the future. Significant judgment is required in determining our worldwide provision for income taxes. These determinations are highly complex and require detailed analysis of the available information and applicable statutes and regulatory materials. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. Although we believe our tax estimates are reasonable, the final determination of tax audits and any related litigation could be materially different from our historical tax practices, provisions and accruals. If we receive an adverse ruling as a result of an audit, or we unilaterally determine that we have misinterpreted provisions of the tax regulations to which we are subject, there could be a material effect on our tax provision, net loss or cash flows in the period or periods for which that determination is made. In addition, liabilities associated with taxes are often subject to an extended or indefinite statute of limitations period. Therefore, we may be subject to additional tax liability (including penalties and interest) for a particular year for extended periods of time.

Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

As of January 31, 2021, we had U.S. federal net operating loss carryforwards of approximately $697.1 million, state net operating loss carryforwards of approximately $561.7 million, and foreign net operating loss carryforwards of approximately $318.4 million. Under Sections 382 and 383 of Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes, such as research tax credits, to offset its post-change income and taxes may be limited. In general, an “ownership change” occurs if there is a cumulative change in our ownership by “5% shareholders” that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. If we experience ownership changes as a result of future transactions in our stock, then we may

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be further limited in our ability to use our net operating loss carryforwards and other tax assets to reduce taxes owed on the net taxable income that we earn. Any such limitations on the ability to use our net operating loss carryforwards and other tax assets could adversely impact our business, financial condition and operating results.

We are subject to governmental export controls that could impair our ability to compete in international markets due to licensing requirements and economic sanctions programs that subject us to liability if we are not in full compliance with applicable laws.

Certain of our services are subject to export controls, including the U.S. Department of Commerce’s Export Administration Regulations and various economic and trade sanction regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Controls. The provision of our products and services must comply with these laws. The U.S. export control laws and U.S. economic sanctions laws include prohibitions on the sale or supply of certain products and services to U.S. embargoed or sanctioned countries, governments, persons and entities and also require authorization for the export of encryption items. In addition, various countries regulate the import of certain encryption technology, including through import permitting and licensing requirements, and have enacted laws that could limit our ability to distribute our services or could limit our customers’ ability to implement our services in those countries.

Although we take precautions to prevent our services from being provided in violation of such laws, our solutions may have been in the past, and could in the future be, provided inadvertently in violation of such laws, despite the precautions we take. If we fail to comply with these laws, we and our employees could be subject to civil or criminal penalties, including the possible loss of export privileges, monetary penalties, and, in extreme cases, imprisonment of responsible employees for knowing and willful violations of these laws. We may also be adversely affected through penalties, reputational harm, loss of access to certain markets, or otherwise.

Changes in tariffs, sanctions, international treaties, export/import laws and other trade restrictions or trade disputes may delay the introduction and sale of our services in international markets, prevent our customers with international operations from deploying our services or, in some cases, prevent the export or import of our services to certain countries, governments, persons or entities altogether. Any change in export or import regulations, economic sanctions or related laws, shift in the enforcement or scope of existing regulations, or change in the countries, governments, persons or technologies targeted by such regulations, could result in decreased use of our services, or in our decreased ability to export or sell our services to existing or potential customers with international operations. Any decrease in the use of our services or limitation on our ability to export or sell our services would likely adversely affect our business, financial condition and operating results.

Failure to comply with anti-bribery, anti-corruption, and anti-money laundering laws could subject us to penalties and other adverse consequences.

We are subject to the Foreign Corrupt Practices Act (FCPA), the U.K. Bribery Act and other anti-corruption, anti-bribery and anti-money laundering laws in various jurisdictions both domestic and abroad. In addition to our own sales force, we also leverage third parties to sell our products and services and conduct our business abroad. We and our third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities and may be held liable for the corrupt or other illegal activities of these third-party business partners and intermediaries, our employees, representatives, contractors, channel partners, and agents, even if we do not explicitly authorize such activities. While we have policies and procedures to address compliance with such laws, we cannot assure you that our employees and agents will not take actions in violation of our policies or applicable law, for which we may be ultimately held responsible. Any violation of the FCPA or other applicable anti-bribery, anti-corruption, and anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, or suspension or debarment from U.S. government contracts, all of which may have an adverse effect on our reputation, business, operating results and prospects.

Risks Related to Ownership of Our Class A Common Stock

Anti-takeover provisions contained in our amended and restated certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

Our amended and restated certificate of incorporation, amended and restated bylaws and Delaware law contain provisions which could have the effect of rendering more difficult, delaying or preventing an acquisition deemed undesirable by our board of directors. Among other things, our amended and restated certificate of incorporation and amended and restated bylaws include provisions:

• authorizing a classified board of directors whose members serve staggered three-year terms;

• authorizing “blank check” preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our Class A common stock;

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• limiting the liability of, and providing indemnification to, our directors and officers;

• limiting the ability of our stockholders to call and bring business before special meetings;

• requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our board of directors; and

• controlling the procedures for the conduct and scheduling of board directors and stockholder meetings.

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.

As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation Law, which prevents certain stockholders holding more than 15% of our outstanding capital stock from engaging in certain business combinations without approval of the holders of at least two-thirds of our outstanding Class A common stock not held by such stockholder.

Any provision of our amended and restated certificate of incorporation, amended and restated bylaws or Delaware law that has the effect of delaying, preventing or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our capital stock, and could also affect the price that some investors are willing to pay for our Class A common stock.

The market price of our Class A common stock has been and may continue to be volatile, and you could lose all or part of your investment.

The market price of our Class A common stock has been and may continue to be subject to wide fluctuations in response to various factors, some of which are beyond our control and may not be related to our operating performance. In addition to the factors discussed in this “Risk Factors” section and elsewhere in this Annual Report on Form 10-K, factors that could cause fluctuations in the market price of our Class A common stock include the following:

• price and volume fluctuations in the overall stock market from time to time;

• volatility in the market prices and trading volumes of technology stocks;

• changes in operating performance and stock market valuations of other technology companies generally or those in our industry in particular;

• sales of shares of our Class A common stock by us or our stockholders;

• whether our results of operations meet the expectations of securities analysts or investors and changes in actual or future expectations of investors or securities analysts;

• the financial projections we may provide to the public, any changes in those projections or our failure to meet those projections;

• announcements by us or our competitors of new products or services;

• the public’s reaction to our press releases, other public announcements and filings with the SEC;

• rumors and market speculation involving us or other companies in our industry;

• actual or anticipated changes in our operating results or fluctuations in our operating results;

• actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally;

• litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors;

• developments or disputes concerning our intellectual property or other proprietary rights;

• announced or completed acquisitions of businesses or technologies by us or our competitors;

• new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

• network or service outages, internet disruptions, the availability of our service, security breaches or perceived security breaches and vulnerabilities;

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• changes in accounting standards, policies, guidelines, interpretations or principles;

• actions instituted by activist shareholders or others;

• any significant change in our management; and

• general economic conditions and slow or negative growth of our markets.

In addition, in the past, following periods of volatility in the overall market and the market price of a particular company’s securities, securities class action litigation has often been instituted against these companies. Any future securities litigation could result in substantial costs and a diversion of our management’s attention and resources.

Servicing our future debt may require a significant amount of cash, and we may not have sufficient cash flow from our business to settle conversions of our convertible senior notes in cash, repay the convertible senior notes at maturity, or repurchase the convertible senior notes as required following a fundamental change.

In January 2021, we issued $345.0 million aggregate principal amount of convertible senior notes. Prior to October 15, 2025, the Notes are convertible at the option of the holders only under certain conditions or upon occurrence of certain events. We have made an irrevocable election to settle the principal of the Notes in cash. If holders of the Notes elect to convert their Notes, we will be required to make cash payments in respect of the Notes being converted. Holders of the Notes also have the right to require us to repurchase all or a portion of their Notes upon the occurrence of a fundamental change (as defined in the indenture governing the Notes) at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest. If the Notes have not previously been converted or repurchased, we will be required to repay the Notes in cash at maturity.

Our ability to make required cash payments in connection with conversions of the Notes, repurchase the Notes in the event of a fundamental change, or to repay or refinance the Notes at maturity will depend on market conditions and our past and expected future performance, which is subject to economic, financial, competitive, and other factors beyond our control. We also may not use the cash proceeds we raised through the issuance of the Notes in an optimally productive and profitable manner. Since inception, our business has generated net losses, and we may continue to incur significant losses. As a result, we may not have enough available cash or be able to obtain financing, or financing at acceptable terms, at the time we are required to repurchase or repay the Notes or pay cash with respect to Notes being converted.

In addition, our ability to repurchase or pay cash upon conversion or at maturity of the Notes may be limited by law or regulatory authority. Our failure to repurchase Notes following a fundamental change or to pay cash upon conversion or at maturity of the Notes as required by the indenture would constitute a default under such indenture. A default under the indenture or the fundamental change itself could also lead to a default under our senior credit facility, our other outstanding indebtedness, or agreements governing our future indebtedness and could have a material adverse effect on our business, results of operations, and financial condition. If the payment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Notes or to pay cash upon conversion or at maturity of the Notes.

The accounting method for the Notes could adversely affect our financial condition and operating results.

In August 2020, the FASB published an Accounting Standards Update, or ASU 2020-06, to reduce the number of accounting models for convertible debt instruments. We adopted ASU 2020-06, effective February 1, 2021, utilizing the modified retrospective method. Under ASU 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, the Notes will be accounted for as a single liability measured at amortized cost. Further, ASU 2020-06 eliminates the use of the treasury stock method for convertible instruments that can be settled in whole or in part with equity, and instead requires application of the “if-converted” method. Under that method, diluted earnings per share is generally calculated assuming that all the Notes were converted solely into shares of Class A common stock at the beginning of the reporting period, unless the result would be antidilutive. The application of the if-converted method may reduce our reported diluted earnings per share. However, effective February 5, 2021, we have made an irrevocable election to settle the principal portion of the Notes only in cash. Accordingly, effective from that date forward, the earnings per shares results will only be impacted by the conversion premium.

Furthermore, if any of the conditions to the convertibility of the Notes is satisfied, then we may be required under applicable accounting standards to reclassify the liability carrying value of the Notes as a current, rather than a long-term, liability. This reclassification could be required even if no noteholders convert their Notes and could materially reduce our reported working capital.

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The capped call transactions may affect the value of our Class A common stock.

In connection with the issuance of the Notes, we entered into capped call transactions with various counterparties. The capped call transactions cover, subject to customary adjustments, the number of shares of our Class A common stock initially underlying the Notes. The capped call transactions are expected generally to reduce or offset the potential dilution to our Class A common stock upon any conversion of the Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price.

From time to time, the counterparties to the capped call transactions or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our Class A common stock and/or purchasing or selling our Class A common stock or other securities of ours in secondary market transactions prior to the maturity of the Notes. This activity could also cause or prevent an increase or a decrease in the market price of our Class A common stock or the Notes.

We are subject to counterparty risk with respect to the capped call transactions.

The counterparties to the capped call transactions that we entered into are financial institutions, and we will be subject to the risk that one or more of the counterparties may default or otherwise fail to perform, or may exercise certain rights to terminate, their obligations under the capped call transactions. Our exposure to the credit risk of the counterparties will not be secured by any collateral.

Global economic conditions have in the past resulted in the actual or perceived failure or financial difficulties of many financial institutions. If a counterparty to one or more capped call transactions becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at the time under such transaction. Our exposure will depend on many factors but, generally, our exposure will increase if the market price or the volatility of our Class A common stock increases. In addition, upon a default or other failure to perform, or a termination of obligations, by a counterparty, the counterparty may fail to deliver the consideration required to be delivered to us under the capped call transactions and we may experience more dilution than we currently anticipate with respect to our Class A common stock. We can provide no assurances as to the financial stability or viability of the counterparties.

Our business could be negatively affected as a result of actions of activist shareholders.

We value constructive input from investors and regularly engage in dialogue with our shareholders regarding strategy and performance. Our board of directors and management team are committed to acting in the best interests of all of our shareholders. There is no assurance that the actions taken by our board of directors and management in seeking to maintain constructive engagement with certain shareholders will be successful.

The company recently received a notice from Starboard Value and Opportunity Master Fund Ltd. (“Starboard”) of its intention to nominate four director candidates for election to our board of directors at our 2021 annual meeting of stockholders. Starboard has also made public statements critical of our board of directors, management and strategic partnerships. Responding to these actions by Starboard and potential actions by other activist shareholders could be costly and time-consuming, disrupt our operations and divert the attention of management, our board of directors and our employees. A contested election with respect to the company's directors could also require us to incur substantial legal, public relations and other advisory fees and proxy solicitation expenses. Further, we may choose to initiate, or may become subject to, litigation as a result of proposals by activist shareholders or proxy contests or matters relating thereto, which would serve as a further distraction to our board of directors and management and could require us to incur significant additional costs.

Additionally, perceived uncertainties as to our future direction as a result of shareholder activism or changes to the composition of our board of directors may lead to the perception of a change in the direction of our business or other instability, which may be exploited by our competitors and/or other activist shareholders and cause concern to our current or potential customers, employees, investors, strategic partners and other constituencies, which could result in lost sales and the loss of business opportunities and make it more difficult to attract and retain qualified personnel and business partners. If customers choose to delay, defer or reduce transactions with us or do business with our competitors instead of us, then our business, financial condition and operating results would be adversely affected. In addition, our share price could experience periods of increased volatility as a result of shareholder activism.

The holders of Series A Convertible Preferred Stock will be entitled to vote on an as-converted to Class A common stock basis and have rights to approve certain actions.  Additionally, KKR may exercise influence over us through their ability to designate a member of our board of directors.

The holders of our Series A Convertible Preferred Stock are generally entitled to vote with the holders of our Class A common stock on all matters submitted for a vote of holders of shares of Class A common stock (voting together with the holders of shares of Class A common stock as one class) on an as-converted basis.

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Pursuant to the Investment Agreement, KKR has the right to designate one candidate for nomination for election to our board of directors for so long as KKR and its permitted transferees maintain minimum aggregate holdings of our stock as described in further detail in the Investment Agreement. Notwithstanding the fact that all directors will be subject to fiduciary duties to us and to applicable law, the interests of the director designated by KKR may differ from the interests of our security holders as a whole or of our other directors.

Additionally, the consent of the holders of a majority of the outstanding shares of Series A Convertible Preferred Stock is required in order for us to take certain actions, including issuances of securities that are senior to, or equal in priority with, the Series A Convertible Preferred Stock, and payments of special dividends in excess of an agreed upon amount.

As a result, the holders of Series A Convertible Preferred Stock may in the future have the ability to influence the outcome of certain matters affecting our governance and capitalization.

The issuance of shares of our Series A Convertible Preferred Stock reduces the relative voting power of holders of our Class A common stock, and the conversion of those shares into shares of our Class A common stock would dilute the ownership of Class A common stockholders and may adversely affect the market price of our Class A common stock. 

The holders of our Series A Convertible Preferred Stock are entitled to vote, on an as-converted basis, together with holders of our Class A common stock on all matters submitted to a vote of the holders of our Class A common stock, which reduces the relative voting power of the holders of our Class A common stock. In addition, the conversion of our Series A Convertible Preferred Stock into Class A common stock would dilute the ownership interest of existing holders of our Class A common stock, and any conversion of the Series A Convertible Preferred Stock would increase the number of shares of our Class A common stock available for public trading, and which adversely affect prevailing market prices of our Class A common stock.

Our Series A Convertible Preferred Stock has rights, preferences and privileges that are not held by, and are preferential to the rights of, our Class A common stockholders, which could adversely affect our liquidity and financial condition.

The holders of our Series A Convertible Preferred Stock have the right to receive a payment on account of the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of our business before any payment may be made to holders of any other class or series of capital stock. In addition, dividends on the Series A Convertible Preferred Stock accrue and are cumulative at the rate of 3.0% per annum, compounding quarterly, and paid-in-kind or paid in cash, at our election.

The holders of our Series A Convertible Preferred Stock also have certain redemption rights, including the right to require us to repurchase all or any portion of the Series A Convertible Preferred Stock at any time following the seventh anniversary of the original issuance date, at 100% of the liquidation preference thereof plus all accrued but unpaid dividends. In addition, upon prior written notice of certain change of control events, the shares of the Series A Preferred Stock will automatically be redeemed by us for a repurchase price equal to the greater of (i) the value of the shares of Series A Preferred Stock as converted into Class A common stock at the then-current conversion price and (ii) an amount in cash equal to 100% of the then-current liquidation preference thereof plus all accrued but unpaid dividends. In the case of clause (ii) above, we will also be required to pay the holders of our Series A Preferred Stock a “make-whole” premium consisting of dividends that would have otherwise accrued from the effective date of such change of control through the fifth anniversary of the original issuance date.

These dividend and share repurchase obligations could impact our liquidity and reduce the amount of cash flows available for working capital, capital expenditures, growth opportunities, acquisitions, and other general corporate purposes. Our obligations to the holders of our Series A Convertible Preferred Stock could also limit our ability to obtain additional financing, which could have an adverse effect on our financial condition. The preferential rights could also result in divergent interests between the holders of our Series A Convertible Preferred Stock and holders of our Class A common stock.

If securities or industry analysts do not publish or cease publishing research or reports about us, our business, our market or our competitors, or if they adversely change their recommendations regarding our Class A common stock, the market price of our Class A common stock and trading volume could decline.

The trading market for our Class A common stock is influenced, to some extent, by the research and reports that securities or industry analysts publish about us, our business, our market or our competitors. If any of the analysts who cover us adversely change their recommendations regarding our Class A common stock or provide more favorable recommendations about our competitors, the market price of our Class A common stock would likely decline. If any of the analysts who cover us cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price of our Class A common stock or trading volume to decline.

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We do not expect to declare any dividends in the foreseeable future.

We do not anticipate declaring any cash dividends to holders of our Class A common stock in the foreseeable future. Consequently, investors may need to rely on sales of our Class A common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment. Investors seeking cash dividends should not purchase shares of our Class A common stock. 

Items 2, 3, 4 and 5 are not applicable and have been omitted.

Item 6. EXHIBITS

The documents listed in the Exhibit Index of this Quarterly Report on Form 10-Q are incorporated by reference or are filed with this Quarterly Report on Form 10-Q, in each case as indicated therein (numbered in accordance with Item 601 of Regulation S-K).

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EXHIBIT INDEX

Exhibit		Incorporated by Reference
Number	Exhibit Description	Form	File No.	Exhibit	Filing Date
3.1	Certificate of Designations Designating the Series A Convertible Preferred Stock	8-K	001-36805	3.1	May 18, 2021
10.1	Investment Agreement, dated April 7, 2021, by and among Box, Inc., Powell Investors III L.P., KKR-Milton Credit Holdings L.P., KKR-NYC Credit C L.P., Tailored Opportunistic Credit Fund, and CPS Holdings (US) L.P.	8-K	001-36805	10.1	April 8, 2021
10.2	Registration Rights Agreement, dated May 12, 2021, by and among the Company and ALOHA European Credit Fund, L.P., Centerbridge Credit Partners Master, L.P., Centerbridge Special Credit Partners III-Flex, L.P., CPS Holdings (US) L.P., Future Fund Board of Guardians, Illinois State Board of Investment, Indiana Public Retirement System, Kennedy Lewis Capital Partners Master Fund II L.P., KKR-Milton Credit Holdings L.P., KKR-NYC Credit C L.P., OHA AD Customized Credit Fund (International), L.P., OHA Artesian Customized Credit Fund I, L.P., OHA BCSS SSD II, L.P., OHA Black Bear Fund, L.P., OHA Centre Street Partnership, L.P., OHA Credit Solutions Master Fund II SPV, L.P., OHA Delaware Customized Credit Fund Holdings, L.P., OHA Delaware Customized Credit Fund-F, L.P., OHA Dynamic Credit ORCA Fund, L.P., OHA Enhanced Credit Strategies Master Fund, L.P., OHA KC Customized Credit Master Fund, L.P., OHA MPS SSD II, L.P., OHA SA Customized Credit Fund, L.P., OHA Strategic Credit Master Fund II, L.P., OHA Structured Products Master Fund D, L.P., OHA Tactical Investment Master Fund, L.P., OHAT Credit Fund, L.P., Powell Investors III L.P., Tailored Opportunistic Credit Fund, The Coca-Cola Company Master Retirement Trust	8-K	001-36805	10.1	May 18, 2021
10.3	Joinder Agreement, dated May 12, 2021, by and among the Company, Powell Investors III L.P., a Cayman Islands exempted limited partnership, KKR-Milton Credit Holdings L.P., a Cayman Islands exempted limited partnership, KKR-NYC Credit C L.P., a Delaware limited partnership, Tailored Opportunistic Credit Fund, an Australian trust and CPS Holdings (US) L.P., a Delaware limited partnership, and ALOHA European Credit Fund, L.P., Centerbridge Credit Partners Master, L.P., Centerbridge Special Credit Partners III-Flex, L.P., Future Fund Board of Guardians, Illinois State Board of Investment, Indiana Public Retirement System, Kennedy Lewis Capital Partners Master Fund II L.P., OHA AD Customized Credit Fund (International), L.P., OHA Artesian Customized Credit Fund I, L.P., OHA BCSS SSD II, L.P., OHA Black Bear Fund, L.P., OHA Centre Street Partnership, L.P., OHA Credit Solutions Master Fund II SPV, L.P., OHA Delaware Customized Credit Fund Holdings, L.P., OHA Delaware Customized Credit Fund-F, L.P., OHA Dynamic Credit ORCA Fund, L.P., OHA Enhanced Credit Strategies Master Fund, L.P., OHA KC Customized Credit Master Fund, L.P., OHA MPS SSD II, L.P., OHA SA Customized Credit Fund, L.P., OHA Strategic Credit Master Fund II, L.P., OHA Structured Products Master Fund D, L.P., OHA Tactical Investment Master Fund, L.P., OHAT Credit Fund, L.P., The Coca-Cola Company Master Retirement Trust	8-K	001-36805	10.2	May 18, 2021
10.4	Waiver of Investment Agreement, dated May 13, 2021, by the Company	8-K	001-36805	10.3	May 18, 2021
10.5	Wells Fargo Bank National Association Limited Consent under Credit Agreement, dated April 7, 2021
10.6☐	Box, Inc. Outside Director Compensation Policy, amended and restated on May 1, 2021

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Exhibit		Incorporated by Reference
Number	Exhibit Description	Form	File No.	Exhibit	Filing Date
31.1	Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document.
101.SCH	Inline XBRL Taxonomy Schema Linkbase Document.
101.DEF	Inline XBRL Taxonomy Definition Linkbase Document.
101.CAL	Inline XBRL Taxonomy Calculation Linkbase Document.
101.LAB	Inline XBRL Taxonomy Labels Linkbase Document.
101.PRE	Inline XBRL Taxonomy Presentation Linkbase Document.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

☐ Indicates a management contract or compensatory plan or arrangement.

* The certifications attached as Exhibit 32.1 that accompany this Quarterly Report on Form 10-Q are deemed furnished and not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Box, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: June 4, 2021

BOX, INC.
By:	/s/ Aaron Levie
	Aaron Levie
	Chief Executive Officer
	(Principal Executive Officer)

By:	/s/ Dylan Smith
	Dylan Smith
	Chief Financial Officer
	(Principal Financial Officer)

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EX-10.5

Exhibit 10.5

EXECUTIONVERSION

WELLSFARGOBANK,NATIONAL
ASSOCIATION

April7,2021

Box,Inc.

900 Jefferson Ave.RedwoodCity,CA 94063

Attention:ChiefFinancial Officer

Re:Limited Consent.

LadiesandGentlemen:

Reference is made to that certain Credit Agreement, dated as of November 27, 2017 (asamendedbythatcertainAmendmentNo.1datedasofJuly12,2019,thatcertainletteragreement dated as of September 27, 2019, that certain letter agreement dated as of April 17,2020, that certain letter agreement dated as of February 2, 2021 and as otherwise amended,restated or otherwise modified and in effect immediately prior to the date hereof, the “CreditAgreement”),byandbetweenBOX,INC.(“Borrower”)andWELLSFARGOBANK,NATIONAL ASSOCIATION (“Lender”).Capitalized terms not defined in this letter agreement(this“Agreement”)areused hereinas defined intheCreditAgreement.

TheBorrowerhasrequestedthattheLenderconsentto(a)theissuanceofupto $500,000,000ofconvertiblepreferredstockoftheBorrower(the“PreferredStock”)onsubstantiallythetermssetforthintheproposalattachedheretoasExhibitA,(b)therepurchaseof common Equity Interests of the Borrower with the proceeds of the issuance of the PreferredStock, (c) the accrual of dividends with respect to the Preferred Stock and (d) conversion of thePreferred Stock into common stock of the Borrower and thepayment of cash in lieu of fractionalsharesinconnection therewith(collectively, the “Specified Transactions”).

UponeffectivenessofthisAgreement,theLenderherebyconsentstotheSpecifiedTransactions (the “Limited Consent”).For the avoidance of doubt, the payment of cash in lieu offractional shares in connection with any conversion of the Preferred Stock to common stock shallnot cause the Preferred Stock to constitute Disqualified Equity Interests. The Limited Consentshall apply only to the matters set forth in this paragraph.Without limiting the generality of theforegoing,theLimitedConsentshallnotapplytoanyfuturecircumstanceswhetherornotsimilar to the foregoing.Notwithstanding the Limited Consent, the parties hereto acknowledgeand agree that any payment in cash by the Borrower or any Subsidiary in respect of the PreferredStock (including any cash redemptions of the Preferred Stock) shall in each case constitute an

unpermitted Restricted Payment under Section 6.02(c) of the Credit Agreement and result in animmediate Event of Default, except in each case to the extent such cash payment is permitted bytheterms ofSection 6.02(c)oftheCredit Agreement.

TheprovisionsofthisAgreementshallbeeffectiveupontheLender’sreceiptof counterparts of this Agreement executed by the Lender and the Borrower.Upon satisfaction oftheforegoingconditions,theLendershallpromptlyconfirmthesameinane-mailtotheBorrowerUponsucheffectiveness,allreferencestotheCreditAgreementintheLoanDocumentsshallrefertotheCreditAgreement asamendedby thisAgreement.

In consideration for the Limited Consent, the Borrower agrees to pay to the Lender aconsent fee in the amount of $10,000, which consent fee shall be fully earned on the date hereofanddueandpayablein fullin cash onthedate5Business Days afterthedatehereof.

The Borrower hereby confirms that (i) the representations and warranties contained inArticle V of the Credit Agreement and in the other Loan Documents are true, correct andcomplete in all material respects (or, in the case of any such representation or warranty alreadyqualified by materiality or reference to Material Adverse Effect, in all respects) on and as of thedate hereof as though made on and as of the date hereof, except to the extent such representationsand warranties specifically relate to an earlier date, in which case such representations andwarranties were true, correct and complete in all material respects (or, in the case of any suchrepresentation or warranty already qualified by materiality or reference to Material AdverseEffect, in all respects) on and as of such earlier date and (ii) no Event of Default or PotentialEventofDefault has occurred and is continuing.

Exceptasspecificallymodifiedherein,theCreditAgreementandtheotherLoanDocuments shall remain in full force and effect and are hereby ratified and confirmed by theBorrowerinallrespects.ThisAgreementmaybeexecutedinanynumberofidenticalcounterparts, any set of which signed by all the parties hereto shall be deemed to constitute acomplete,executedoriginalforallpurposes.Transmissionbyfacsimile,“pdf”orsimilarelectronic copy of an executed counterpart of this letter agreement shall be deemed to constitutedue and sufficient delivery of such counterpart.The words “execution,” “signed,” “signature,”“delivery,” and words of like import in or relating to this Agreement or anydocument to besigned in connection with this Agreement and the transactions contemplated hereby shall bedeemed to include electronic signatures, deliveries or the keeping of records in electronic form,each of which shall be of the same legal effect, validity or enforceability as a manually executedsignature, physical delivery thereof or the use of a paper-based recordkeeping system, as the casemay be, to the extent and as provided for in any applicable law, including the federal ElectronicSignaturesinGlobalandNationalCommerceAct,theCaliforniaUniformElectronicTransactions Act, or any other state laws based on the Uniform Electronic Transactions Act, andthe parties to this Agreement consent to conduct the transactions contemplated hereunder byelectronic means.This Agreement shall be governed by, construed and enforced in accordancewith,thelawsoftheStateofCaliforniawithoutgivingeffecttoitschoiceoflawprincipleswhichwould result in the application ofthelawofanotherjurisdiction.

[ThisSpaceIntentionally LeftBlank]

2

This letter agreement is a Loan Document as defined in the Credit Agreement, and the expense reimbursement, indemnification, waiver of jury trial, consent to jurisdiction and other provisions of the Credit Agreement generally applicable to Loan Documents are applicable hereto and incorporated herein by this reference and this letter agreement shall be interpreted, construed and enforced as if all such provisions were set forth in full in this letter agreement.

Sincerely,
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Lender
By:	/s/ Travis Padgett
Name:	Travis Padgett
Title:	Senior Vice President

[Signature Page to Limited Consent – Box (Preferred Stock)]

Accepted and agreed to:
BOX, INC.,
a Delaware corporation
By:	/s/ Jeff Mannie
Name:	Jeff Mannie
Title:	VP Controller, CAO

[Signature Page to Limited Consent – Box (Preferred Stock)]

EXHIBITA

Term Sheet(seeattached)

RevisedKKRProposal

The terms set forth below are for the purpose of soliciting the principal terms on which KKRalong with a group of financial institutions (each, an “Investor” and collectively, the “Investors”)would be willing to make an investment in Box, Inc. (“Box” or the “Company”).This TermSheet is intended solely as a basis for further discussion and is not intended to be and does notconstitute a legally binding obligation.No other legally binding obligations will be created,impliedorinferreduntil definitiveagreements,ifany,are executedanddeliveredbyallparties.

Size $500million(the“Face Amount”)

Security Convertiblepreferredstock

UseofProceeds Sharebuybackandgeneralcorporatepurposes

Yield 3.0%perannum compoundingquarterly,paid-in-kind(“PIK”),orpaidin cash, at the Company’s election. Participates ratably with theholders of the Company’s common stock, in all dividends paid on thecommon stock when, as and if declared by the Company’s board ofdirectors.

ConversionPrice 30%premiumtothe10tradingdayvolumeweightedaveragestockprice after announcement of the transaction, up to a maximumconversion price of $27.00 and a minimum of $24.00 (subject tocustomarystructuralanti-dilutionprotection).

Conversion Convertibleatanytimeafterissuancebyholder.

Following the 3^rd anniversary of the closing, the Company can forceconversion if stock VWAP exceeds 200% of Conversion Price for 20out of 30 consecutive days prior to the conversion notice (includingthelasttradingdayinsuch30-dayperiod).Customaryconversioncaptocomply with NYSE20%rule.

LiquidationPreference Greaterof(i)theFace Amount,plusaccruedand unpaiddividendsand

(ii)as-convertedvalue.

Maturity Nomaturity.

Governance KKR shall have the right to elect at least one board seat (the “InvestorRepresentative”), so long as KKR continues to hold at least 50% ofinitial preferred or common stock underlying initial preferredpurchased by it on the issue date (to the extent permissible pursuant toapplicable stock exchange rules).[John Park] shall be the initialInvestor Representative and shall serve as a Class II director. TheInvestor Representative will not be entitled to any compensation fromtheCompany forhis service.

pg.1

The Investor Representative shall be elected to the audit committeeand the compensation committee of the Board for so long as Investorhas board designation rights (or a non-voting observer to the extentstockexchangerulesdo notpermitadirectorseat onsuchcommittee).

TheInvestorRepresentative’sparticipationorattendanceinmeetingsof the Board or any committee thereof shall be subject to customaryexceptionsforconflicts ofinterest.

InvestorRedemption Upon the seventh anniversary of the Closing Date, each holder mayrequiretheCompanytoredeemallor aportionof thePreferredStockattheLiquidation Preference

ChangeofControl Upon a change of control with prior written notice, unless earlierconverted, the Preferred Stock will be automatically redeemed at aRepurchasePriceequaltothegreaterof(a)100% oftheFaceAmountof the Preferred Stock subject to repurchase, plus accrued and unpaiddividends, plus an undiscounted make-whole premium consisting ofdividends through the fifth anniversary of the closing and (b) the as-convertedvalue

CompanyRedemption The Company may redeem the Preferred Stock in whole or in part,ratably, beginning five years after the Closing Date at 105% of thepurchase price, after six years at 102% of the purchase price and afterseven years at 100%, plus, in each case, accrued and unpaid dividends,payablein cash

EachHolderofPreferredStocktohaverighttoconvertpriortosuchredemption

Restrictions Convertible Preferred (and underlying common stock) not transferablefor 1 year, except to affiliates and other customary exceptions to bemutually agreed; no Investor can enter into or engage in any hedge,swap, short sale, derivative transaction or other agreement orarrangement that transfers to any third party, any of the economicconsequences of ownership of the Convertible Preferred (or underlyingcommon stock) duringtheperiod commencingonthe dateof signingof the definitive agreement and ending on the 1 year anniversary of theClosing Date (with customary CUSIP registration after 1 yearanniversary of the Closing Date); never transferable to any person that,together with its affiliates, would hold greater than 5% of outstandingshares (on an as converted basis) or to any “activist”¹ investor or anycompetitoroftheCompany.

¹Note to draft: Defined term to be agreed in definitive documents; propose the following definition for discussion:“Activist” means, as of any date of determination, a Person (other than the Investors or their Affiliates) that has,directlyorindirectlythroughitsAffiliates,whetherindividuallyorasamemberofa“group”(asdefinedinSection

pg.2

Governancerightsnottransferable(otherthan registrationrights)

Each Investor to agree to customary standstill for 1 year, prohibiting,among other things, purchases of debt or equity securities of theCompany above thresholds to be agreed.With respect to KKR only,thestandstillshallapplyuntilthedatethatis6monthsafterthelaterof

(i) the date that KKR no longer has a right to designate its board seatand (ii) the date that KKR, together with their affiliates, in theaggregate,nolongerownsatleast25%ofinitialpreferredorcommonstockunderlyinginitialpreferredpurchased byitontheissuedate.

RegistrationRights Customarydemandand piggybackregistrationrights

Voting Vote on as-converted basis with common stock; each Investor(including any transferee) to agree to vote Preferred Stock (andunderlyingcommonstock)inaccordancewiththerecommendationofthe Board, excluding actions which would disproportionally affect thePreferred Stock, until September 30, 2024; provided, that in no eventshall a transaction constituting a change of control of the Company bedeemed to disproportionally affect the Preferred Stock. Voting rightstocomply with NYSE20%rule.

MinorityProtections2 During the period in which the Preferred Stock remains outstanding,consentofholdersofamajorityofthePreferredStock requiredto:

(i) alter the rights or preferences of the Preferred Stock or amend theCompany’s charter documents in a manner that adversely affects thePreferred Stock; (ii) increase or decrease the authorized number ofshares of Preferred Stock; or (iii) create (by reclassification orotherwise) any new class or series of shares having rights, preferencesor privileges senior to or on parity with the Preferred Stock or issueadditional shares of Preferred Stock; or (iv) special dividends above atobeagreed upon amount.

13(d)(3) of the Exchange Act), within the three-year period immediately preceding such date of determination (i)called or publicly sought to call a meeting of the stockholders or other equityholders of any Person not publiclyapproved (at the time of the first such action) by the board of directors or similar governing body of such Person, (ii)publicly initiated any proposal for action by stockholders or other equityholders of any Person initially publiclyopposed by the board of directors or similar governing body of such Person, (iii) publicly sought election to, or toplace a director or representative on, the board of directors or similar governing body of a Person, or publicly soughtthe removal of a director or other representative from such board of directors or similar governing body, in each casewhich election or removal was not recommended or approved publicly (at the time such election or removal is firstsought) by the board of directors or governing body of such Person or (iv) publicly disclosed any intention, plan orarrangementtodoanyofthe foregoing.

² As discussed with MS, will include limited and customary minority sacred rights with respect to issues solelyamongstInvestors.

pg.3

Otherthanabove,nooperatingorfinancialcovenantsorconsentorvetorights.

PreemptiveRights Customarypreemptiverightstoparticipateinfutureequityissuances,ineach case, subjectto customary exceptions

Expenses CompanytoreimburseInvestor’sout-of-pocketexpensesin

connection with the investment, subject to an aggregate cap for allInvestorsof$750,000.

Exclusivity Company shall exclusively negotiate with KKR and cease discussionswithotherpotentialinvestorsthroughtheClosingDate.Thereshallbeno other issues of competing equity or debt securities being offered,placedorarranged.

ClosingConditions HSRandanyotherrequiredregulatoryclearance; andothercustomaryclosing conditions. Completion of confirmatory business, financial,legal,accounting and taxduediligencepriortosigning.

pg.4

Sincerely,
KOHLBERGKRAVISROBERTS&CO.L.P.
By:KKR&Co.,LLC,itsgeneralpartner
By:	/s/ John Park
Name:	John Park
Title:	Member

EX-10.6

Exhibit 10.6

BOX, INC.

OUTSIDE DIRECTOR COMPENSATION POLICY

Box, Inc. (the “Company”) believes that the granting of equity and cash compensation to members of its Board of Directors (the “Board,” and members of the Board, the “Directors”) represents an effective tool to attract, retain and reward Directors who are not employees of the Company (the “Outside Directors”).  This Outside Director Compensation Policy (the “Policy”) is intended to formalize the Company’s policy regarding cash compensation and grants of equity to its Outside Directors.   Unless otherwise defined herein, capitalized terms used in this Policy will have the meaning given such term in the Company’s 2015 Equity Incentive Plan (the “Plan”).  Each Outside Director will be solely responsible for any tax obligations incurred by such Outside Director as a result of the equity and cash payments such Outside Director receives under this Policy.

This Policy became effective on January 22, 2015 (the effective date of the registration statement in connection with the initial public offering of the Company’s securities, and was most recently amended and restated on May 1, 2021 (the “Amendment Date”).

1. Cash Retainers

Annual Cash Retainer for Board Service

Each Outside Director will be paid an annual cash retainer of $35,000.

Annual Cash Retainers for Chairperson, Lead Independent Director and Committee Service

Each Outside Director will be paid additional annual cash retainers for applicable service as follows:

Chairperson	$	50,000
Lead Independent Director	$	20,000
Committee Service:		Chair		Member
Audit	$	20,000	$	10,000
Compensation	$	20,000	$	8,000
Nominating and Corporate Governance	$	10,000	$	5,000
Operating	$	20,000	$	8,000

All cash compensation will be paid quarterly in arrears on a prorated basis.

No Outside Director will receive per meeting attendance fees for attending Board or meetings of committees of the Board.

2. Equity Compensation

Outside Directors will be entitled to receive all types of Awards (except Incentive Stock Options) under the Plan (or the applicable equity plan in place at the time of grant), including discretionary Awards not covered under this Policy.  All grants of Awards to Outside Directors pursuant to Section 2 of this Policy will be automatic and nondiscretionary, except as otherwise provided herein, and will be made in accordance with the following provisions:

(a)No Discretion.  No person will have any discretion to select which Outside Directors will be granted any Awards under this Policy or to determine the number of shares of Company common stock (“Shares”) to be covered by such Awards.

(b)Initial Awards.  Subject to Section 11 of the Plan, effective on the date the person first becomes an Outside Director, whether through election by the stockholders of the Company or appointment by the Board to fill a vacancy, such Outside Director automatically will be granted Restricted Stock Units (“RSUs”) with a Value (as defined below) equal to $400,000 (collectively, the “Initial Award”).

The Initial Award will vest in 3 annual installments beginning with the first anniversary after the grant date, in each case, provided that the Outside Director continues to serve as a Service Provider through the applicable vesting date.

For clarity, a Director who is an Employee who ceases to be an Employee, but who remains a Director, will not receive an Initial Award.

(c)Annual Awards.  Subject to Section 11 of the Plan, on the date of each annual meeting of the Company’s stockholders (the “Annual Meeting”) beginning with the 2020 Annual Meeting, each Outside Director automatically will be granted RSUs with a Value equal to $200,000 (collectively, the “Annual Award”).

The Annual Award will fully vest upon the earlier of: (i) the 12-month anniversary of the grant date; or (ii) the next Annual Meeting, in each case, provided that the Outside Director continues to serve as a Service Provider through the vesting date.

For clarity, an Outside Director will not be eligible for an Annual Award unless the Outside Director has been a Director either (i) for at least 1 full calendar year; or (ii) at the previous year’s Annual Meeting.

(d)Change in Control.  In the event of a Change in Control, each Outside Director will fully vest in his or her Awards.

(e)Termination of Service Due to Death or Disability.  In the event an Outside Director ceases to be a Service Provider due to the Outside Director’s death or Disability (as defined in the Plan), the Outside Director will fully vest in his or her Awards.  In addition, the vesting acceleration provided under the previous sentence will apply to any equity awards granted to the Outside Director prior to the Amendment Date.

(f)Value.  To determine the number of Shares subject to an Initial Award or Annual Award, the specified Value for RSUs will be divided by the average of the closing trading price of a Share for the 30-trading day period ending on the trading day prior to the grant date, or such other methodology the Board or the Compensation Committee of the Board (the “Compensation Committee”) may determine prior to the grant of the RSUs becoming effective.  

3. Travel Expenses

Each Outside Director’s reasonable, customary and documented travel expenses to Board meetings will be reimbursed by the Company.

4. Additional Provisions

All provisions of the Plan not inconsistent with this Policy will apply to Awards granted to Outside Directors.

5. Revisions

The Board in its discretion may change and otherwise revise the terms of Awards granted under this Policy, including, without limitation, the number of Shares subject thereto, for Awards of the same or different type granted on or after the date the Board determines to make any such change or revision.  

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO

EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Aaron Levie, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Box, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 4, 2021	By:	/s/ Aaron Levie
	Name:	Aaron Levie
	Title:	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO

EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Dylan Smith, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Box, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 4, 2021	By:	/s/ Dylan Smith
	Name:	Dylan Smith
	Title:	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Aaron Levie, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of Box, Inc. for the fiscal quarter ended April 30, 2021 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Box, Inc.  

Date: June 4, 2021	By:	/s/ Aaron Levie
	Name:	Aaron Levie
	Title:	Chief Executive Officer

I, Dylan Smith, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of Box, Inc. for the fiscal quarter ended April 30, 2021 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Box, Inc.  

Date: June 4, 2021	By:	/s/ Dylan Smith
	Name:	Dylan Smith
	Title:	Chief Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Apr. 30, 2021	May 28, 2021
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Apr. 30, 2021
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Trading Symbol	BOX
Entity Registrant Name	Box, Inc.
Entity Central Index Key	0001372612
Current Fiscal Year End Date	--01-31
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Title of 12(b) Security	Class A Common Stock, $0.0001 par value per share
Security Exchange Name	NYSE
Entity File Number	001-36805
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-2714444
Entity Address, Address Line One	900 Jefferson Ave
Entity Address, City or Town	Redwood City
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94063
City Area Code	877
Local Phone Number	729-4269
Document Quarterly Report	true
Document Transition Report	false
Entity Common Stock, Shares Outstanding		162,789,262

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Apr. 30, 2021	Jan. 31, 2021
Current assets:
Cash and cash equivalents	$ 561,459	$ 595,082
Short-term investments	50,000
Accounts receivable	112,253	228,309
Prepaid expenses and other current assets	26,371	16,785
Deferred commissions	39,514	39,110
Total current assets	789,597	879,286
Property and equipment, net	146,100	160,148
Operating lease right-of-use assets, net	183,401	194,253
Goodwill	75,597	18,740
Deferred commissions, non-current	63,487	66,481
Other long-term assets	51,949	32,774
Total assets	1,310,131	1,351,682
Current liabilities:
Accounts payable, accrued expenses and other current liabilities	34,904	32,128
Accrued compensation and benefits	20,761	39,123
Finance lease liabilities	47,110	49,888
Operating lease liabilities	43,881	47,771
Deferred revenue	406,049	443,929
Total current liabilities	552,705	612,839
Debt, net, non-current	366,061	297,614
Finance lease liabilities, non-current	49,877	60,351
Operating lease liabilities, non-current	182,348	192,531
Deferred revenue, non-current	17,200	21,684
Other long-term liabilities	17,127	15,598
Total liabilities	1,185,318	1,200,617
Commitments and contingencies (Note 8)
Stockholders’ equity:
Class A common stock, par value $0.0001 per share; 1,000,000 shares authorized; 162,762 shares (unaudited) and 159,851 shares issued and outstanding as of April 30 and January 31, 2021, respectively	16	16
Additional paid-in capital	1,462,038	1,474,843
Treasury stock	(1,177)	(1,177)
Accumulated other comprehensive loss	(371)	(938)
Accumulated deficit	(1,335,693)	(1,321,679)
Total stockholders’ equity	124,813	151,065
Total liabilities and stockholders’ equity	$ 1,310,131	$ 1,351,682

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Apr. 30, 2021	Jan. 31, 2021
Statement Of Financial Position [Abstract]
Class A Common Stock, par value	$ 0.0001	$ 0.0001
Class A Common Stock, shares authorized	1,000,000,000	1,000,000,000
Class A Common Stock, shares issued	162,762,000	159,851,000
Class A Common Stock, shares outstanding	162,762,000	159,851,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Apr. 30, 2021	Apr. 30, 2020
Income Statement [Abstract]
Revenue	$ 202,441	$ 183,561
Cost of revenue	60,947	53,995
Gross profit	141,494	129,566
Operating expenses:
Research and development	50,859	53,114
Sales and marketing	69,811	72,750
General and administrative	31,087	27,942
Total operating expenses	151,757	153,806
Loss from operations	(10,263)	(24,240)
Interest and other expense, net	(3,999)	(1,103)
Loss before provision for income taxes	(14,262)	(25,343)
Provision for income taxes	311	207
Net loss	$ (14,573)	$ (25,550)
Net loss per share, basic and diluted	$ (0.09)	$ (0.17)
Weighted-average shares used to compute net loss per share, basic and diluted	161,733	151,943

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands		3 Months Ended
		Apr. 30, 2021	Apr. 30, 2020
Statement Of Income And Comprehensive Income [Abstract]
Net loss		$ (14,573)	$ (25,550)
Other comprehensive income (loss)
Changes in foreign currency translation adjustment	[1]	273	(152)
Changes in unrealized loss on cash flow hedge	[1]	294	(1,180)
Other comprehensive income (loss)		567	(1,332)
Comprehensive loss		$ (14,006)	$ (26,882)

[1] Tax effect was not material

XML

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Cumulative Effect, Period of Adoption, Adjustment	Class A Common Stock	Additional Paid-In Capital	Additional Paid-In Capital Cumulative Effect, Period of Adoption, Adjustment	Treasury Stock	Accumulated Other Comprehensive (Loss) Income	Accumulated Deficit	Accumulated Deficit Cumulative Effect, Period of Adoption, Adjustment
Balance as of January 31, 2021 at Jan. 31, 2020	$ 22,357		$ 15	$ 1,302,072		$ (1,177)	$ (307)	$ (1,278,246)
Balance, Beginning, Shares at Jan. 31, 2020			150,611
Issuance of common stock under employee equity plans, net of shares withheld for employee payroll taxes	2,607			2,607
Issuance of common stock under employee equity plans, net of shares withheld for employee payroll taxes, (in shares)			2,835
Stock-based compensation related to stock awards	42,766			42,766
Other comprehensive loss	(1,332)						(1,332)
Net loss	(25,550)							(25,550)
Balance as of April 30, 2021 at Apr. 30, 2020	40,848		$ 15	1,347,445		(1,177)	(1,639)	(1,303,796)
Balance, Ending, Shares at Apr. 30, 2020			153,446
Balance as of January 31, 2021 at Jan. 31, 2021	$ 151,065	$ (68,017)	$ 16	1,474,843	$ (68,576)	(1,177)	(938)	(1,321,679)	$ 559
Balance, Beginning, Shares at Jan. 31, 2021			159,851
Accounting Standards Update Extensible List	ASU 2020-06
Issuance of common stock under employee equity plans, net of shares withheld for employee payroll taxes	$ (1,878)			(1,878)
Issuance of common stock under employee equity plans, net of shares withheld for employee payroll taxes, (in shares)			2,911
Stock consideration in connection with fiscal 2022 acquisition	10,000			10,000
Stock-based compensation related to stock awards	47,649			47,649
Other comprehensive loss	567						567
Net loss	(14,573)							(14,573)
Balance as of April 30, 2021 at Apr. 30, 2021	$ 124,813		$ 16	$ 1,462,038		$ (1,177)	$ (371)	$ (1,335,693)
Balance, Ending, Shares at Apr. 30, 2021			162,762

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Apr. 30, 2021	Apr. 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (14,573)	$ (25,550)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	19,380	17,946
Stock-based compensation expense	41,790	40,043
Amortization of deferred commissions	10,517	8,159
Other	443	74
Changes in operating assets and liabilities:
Accounts receivable, net	116,835	110,367
Deferred commissions	(7,927)	(7,695)
Operating lease right-of-use assets, net	10,852	9,713
Prepaid expenses and other assets	(8,816)	(4,925)
Accounts payable, accrued expenses and other liabilities	(11,906)	(19,713)
Operating lease liabilities	(13,927)	(11,002)
Deferred revenue	(47,896)	(55,500)
Net cash provided by operating activities	94,772	61,917
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term investment	(50,000)
Purchases of property and equipment, net of proceeds from sales	(1,145)	(1,407)
Capitalized internal-use software costs	(1,178)	(3,291)
Acquisitions, net of cash acquired	(56,642)
Proceeds from the sale of a strategic equity investment		107
Net cash used in investing activities	(108,965)	(4,591)
CASH FLOWS FROM FINANCING ACTIVITIES:
Convertible debt issuance costs	(471)
Proceeds from borrowings, net of borrowing costs		30,000
Proceeds from exercise of stock options	1,356	965
Proceeds from issuances of common stock under employee stock purchase plan	12,510	11,906
Employee payroll taxes paid related to net share settlement of restricted stock units	(15,684)	(10,212)
Principal payments of finance lease liabilities	(13,262)	(17,356)
Capitalized internal-use software costs	(3,297)
Net cash (used in) provided by financing activities	(18,848)	15,303
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(211)	200
Net (decrease) increase in cash, cash equivalents, and restricted cash	(33,252)	72,829
Cash, cash equivalents, and restricted cash, beginning of period	595,511	195,586
Cash, cash equivalents, and restricted cash, end of period	562,259	268,415
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Increase in finance lease liabilities	1,107	14,825
Stock consideration in connection with fiscal 2022 acquisition	10,000
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH INFORMATION:
Cash and cash equivalents, beginning of period	595,082	195,586
Restricted cash, beginning of period	429
Cash, cash equivalents, and restricted cash, beginning of period	595,511	195,586
Cash and cash equivalents, end of period	561,459	267,973
Restricted cash, end of period	800	442
Cash, cash equivalents, and restricted cash, end of period	$ 562,259	$ 268,415

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Description of Business and Basis of Presentation

3 Months Ended

Apr. 30, 2021

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Description of Business and Basis of Presentation

Note 1. Description of Business and Basis of Presentation

Description of Business

We were incorporated in the state of Washington in April 2005, and were reincorporated in the state of Delaware in March 2008. We changed our name from Box.Net, Inc. to Box, Inc. in November 2011. Box provides a leading cloud content management platform that enables organizations of all sizes to securely manage cloud content while allowing easy, secure access and sharing of this content from anywhere, on any device.

Basis of Presentation

The accompanying condensed consolidated balance sheet as of April 30, 2021 and the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive loss, the condensed consolidated statements of stockholders’ equity, and the condensed consolidated statements of cash flows for the three months ended April 30, 2021 and 2020, respectively, are unaudited. The condensed consolidated balance sheet data as of January 31, 2021 was derived from the audited consolidated financial statements that are included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2021 (the Form 10-K), which was filed with the Securities and Exchange Commission (the SEC) on March 19, 2021. The accompanying statements should be read in conjunction with the audited consolidated financial statements and related notes contained in our Form 10-K. Other than items discussed under Use of Estimates and Recently Adopted Accounting Pronouncements, there have been no other material changes to our critical accounting policies and estimates during the three months ended April 30, 2021 from those disclosed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K.

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information. Accordingly, they do not include all of the financial information and footnotes required by GAAP for complete financial statements. In the opinion of our management, the unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements in the Form 10-K and include all adjustments necessary for the fair presentation of our balance sheet as of April 30, 2021, and our results of operations, including our comprehensive loss, our stockholders’ equity, and our cash flows for the three months ended April 30, 2021 and 2020. All adjustments are of a normal recurring nature. The results for the three months ended April 30, 2021 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending January 31, 2022.

Certain prior period amounts reported in our condensed consolidated financial statements and notes thereto have been reclassified to conform to the current year presentation. Such reclassifications did not affect total revenues, operating income, or net income.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make, on an ongoing basis, estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ from these estimates. Such estimates include, but are not limited to, the determination of the allowance for accounts receivable, fair value of acquired intangible assets and goodwill, useful lives of acquired intangible assets and property and equipment, timing and costs associated with our asset retirement obligations, the nature and timing of satisfaction of performance obligations, estimate of standalone selling price allocation included in contracts with multiple performance obligations, the estimated expected benefit period for deferred commissions, the estimated useful life of capitalized internal-use software costs, observable price changes of non-marketable equity securities, fair value of derivative instruments, the incremental borrowing rate we use to determine our lease liabilities, fair values of stock-based awards, legal contingencies, the valuation of deferred income tax assets, and unrecognized tax benefits, among others. Management bases its estimates on historical experience and on various other assumptions which management believes to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.   

Certain Risks and Concentrations

Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments, and accounts receivable. Although we deposit our cash with multiple financial institutions, our deposits, at times, may exceed deposit insurance coverage limits.

We sell to a broad range of customers. Our revenue is derived primarily from the United States across a multitude of industries. Accounts receivable are derived from the delivery of our services to customers primarily located in the United States. We accept and settle our accounts receivable using credit cards, electronic payments and checks. A majority of our lower dollar value invoices are settled by credit card on or near the date of the invoice. We do not require collateral from customers to secure accounts receivable. We maintain an allowance for doubtful accounts based upon the expected collectability, which takes into consideration specific customer creditworthiness and current economic trends. We believe collections of our accounts receivable are probable based on the size, industry diversification, financial condition and past transaction history of our customers. As of April 30, 2021 and January 31, 2021, one reseller, which is also a customer, accounted for more than 10% of total accounts receivable. No single customer represented over 10% of our revenue for the three months ended April 30, 2021 and 2020.

We serve our customers and users from data center facilities operated by third parties. In order to reduce the risk of down time of our subscription services, we have established data centers and third-party cloud computing and hosting providers in various locations in the United States and abroad. We have internal procedures to restore services in the event of disaster at any one of our current data center facilities. Even with these procedures for disaster recovery in place, our cloud services could be significantly interrupted during the implementation of the procedures to restore services.

Geographic Locations

For the three months ended April 30, 2021 and 2020, revenue attributable to customers in the United States was 69% and 73%, respectively. For the three months ended April 30, 2021 and 2020, revenue attributable to customers in Japan was 17% and 13%, respectively.

Substantially all of our net assets are located in the United States. As of April 30, 2021 and January 31, 2021, property and equipment located in the United States was approximately 96%.

Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (FASB) issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and by improving consistent application of other areas of Topic 740. We adopted the new standard, effective February 1, 2021, and the adoption did not have a material impact on our consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06 (ASU 2020-06), Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). The amendments in this update were implemented by the FASB to reduce the number of accounting models for convertible debt instruments. Under ASU 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument is accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. There is no longer a debt discount representing the difference between the carrying value, excluding issuance costs, and the principal of the convertible debt instrument and, as a result, there is no longer interest expense from the amortization of the debt discount over the term of the convertible debt instrument. The amendments in this update also require the if-converted method to be applied for all convertible instruments when calculating diluted earnings per share. We early adopted the new standard, effective February 1, 2021, using the modified retrospective method. The comparative periods presented and disclosed in the year of adoption are based on legacy guidance.

Adoption Impact of ASU 2020-06 on the Opening Balance Sheet as of February 1, 2021

In connection with the adoption of ASU 2020-06, we recognized a $0.6 million decrease of accumulated deficit, a $68.6 million decrease of additional paid-in capital, and a $68.0 million increase of debt, net, noncurrent. The adoption of ASU 2020-06 did not have a material effect on our condensed consolidated statements of operations and cash flows.

Recently Issued Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. Reference rate reform refers to the global transition away from certain reference rates, such as the London Interbank Offered Rate (LIBOR), and to the introduction of new reference rates that are based on a larger and more liquid

population of observable transactions. ASU 2020-04 provides temporary optional expedients and exceptions for applying GAAP to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued as a result of reference rate reform. The amendments in this ASU were effective upon issuance do not have a material impact on our condensed consolidated financial statements.

Summary of Significant Accounting Policies

Other than items discussed under Use of Estimates and Recently Adopted Accounting Pronouncements, there have been no material changes to our critical accounting policies during the three months ended April 30, 2021 from those disclosed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K for the fiscal year ended January 31, 2021.

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Revenue

3 Months Ended

Apr. 30, 2021

Revenue From Contract With Customer [Abstract]

Revenue

Note 2. Revenue

Contract Assets

Contract assets, which are presented within accounts receivable, were not material as of April 30, 2021 and January 31, 2021.

Deferred Revenue

Deferred revenue was $423.2 million and $465.6 million as of April 30, 2021 and January 31, 2021, respectively. During the three months ended April 30, 2021 and 2020, we recognized $167.4 million and $154.4 million of revenue that was included in the deferred revenue balance as of January 31, 2021 and 2020, respectively.

Transaction Price Allocated to the Remaining Performance Obligations

As of April 30, 2021, we had remaining performance obligations for subscription contracts of $864.8 million. We expect to recognize revenue on 62% of these remaining performance obligations over the next 12 months, with the substantial majority of the remaining balance expected to be recognized within 24 months.

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Fair Value Measurements

3 Months Ended

Apr. 30, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 3. Fair Value Measurements

We measure our financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. We define fair value as the exchange price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:

• Level 1—Observable inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

• Level 2—Observable inputs are quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices which are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments.

• Level 3—Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. These inputs are based on our own assumptions used to measure assets and liabilities at fair value and require significant management judgment or estimation.

Investments

Financial assets subject to the fair value disclosure requirements were as follows (in thousands):    

	April 30, 2021
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	324,926	$	—	$	—	$	324,926
	January 31, 2021
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	256,861	$	—	$	—	$	256,861

As of April 30, 2021, we had certificates of deposit of $50 million with a maturity of twelve months, which is classified as short-term investments in our condensed consolidated balance sheet.

Fair Value Measurements of Other Financial Instruments

In November 2017, we entered into a secured credit agreement (as amended or otherwise modified from time to time, the “November 2017 Facility”). As of April 30, 2021 and January 31, 2021, we had total debt outstanding relating to the November 2017 Facility with a carrying amount of $30.0 million. The estimated fair value of the November 2017 Facility, which we have classified as a Level 2 financial instrument, approximates its carrying value.

In January 2021, we issued $345.0 million aggregate principal amount of 0.00% convertible senior notes due January 15, 2026 (Notes). The fair value of the Notes is determined using observable market prices. The fair value of the Notes, which we have classified as a Level 2 instrument, was $375.3 million and $348.4 million as of April 30, 2021 and January 31, 2021, respectively.

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Balance Sheet Components

3 Months Ended

Apr. 30, 2021

Balance Sheet Related Disclosures [Abstract]

Balance Sheet Components

Note 4. Balance Sheet Components

Allowance for Doubtful Accounts

Allowance for doubtful accounts, which is presented within accounts receivable, was $3.0 million and $2.7 million as of April 30, 2021 and January 31, 2021, respectively.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):

	April 30,		January 31,
	2021		2021
Prepaid expenses	$	21,551	$	11,672
Capitalized qualifying implementation costs incurred in a hosting arrangement that is a service contract, net of amortization (1)		1,802		1,672
Other current assets		3,018		3,441
Total prepaid expenses and other current assets	$	26,371	$	16,785

(1) Capitalized stock-based compensation expense, which is included in these amounts, was not material for the periods presented. The accumulated amortization of the capitalized costs was $1.6 million and $1.4 million as of April 30, 2021 and January 31, 2021, respectively. Amortization expense related to capitalized costs was not material for the three months ended April 30, 2021 and 2020. We have not recorded any material impairment charges during the periods presented.

Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

	April 30,			January 31,
	2021			2021
Servers and related equipment	$	354,999		$	352,224
Leasehold improvements		78,289			80,558
Computer hardware		21,689			25,810
Furniture and fixtures		13,998			14,157
Construction in progress		9,955			11,422
Total property and equipment		478,930			484,171
Less: accumulated depreciation		(332,830	)		(324,023	)
Total property and equipment, net	$	146,100		$	160,148

As of April 30, 2021, the gross carrying amount of property and equipment included $258.6 million of servers and related equipment and $5.6 million of construction in progress acquired under finance leases, and the accumulated depreciation of property and equipment acquired under these finance leases was $165.5 million. As of January 31, 2021, the gross carrying amount of property and equipment included $256.0 million of servers and related equipment and $7.1 million of construction in progress acquired under finance leases, and the accumulated depreciation of property and equipment acquired under these finance leases was $152.5 million.

Depreciation expense related to property and equipment was $16.2 million and $16.4 million for the three months ended April 30, 2021 and 2020, respectively. Included in these amounts were depreciation expense for servers and related equipment acquired under finance leases in the amount of $13.1 million, for the same periods respectively. Construction in progress primarily consists of servers and networking equipment and storage infrastructure being provisioned in our data center facilities. Interest capitalized to property and equipment was not material for the periods presented.

Operating Lease Right-of-Use Assets, Net

Operating lease right-of-use assets, net consisted of the following (in thousands):

	April 30,			January 31,
	2021			2021
Operating lease right-of-use assets	$	270,331		$	270,428
Less: accumulated amortization		(86,930	)		(76,175	)
Operating lease right-of-use assets, net	$	183,401		$	194,253

Other Long-term Assets

Other long-term assets consisted of the following (in thousands):

	April 30,		January 31,
	2021		2021
Acquired intangible assets, net of amortization	$	19,781	$	—
Internally developed software costs, net of amortization (1) (2)		16,007		16,071
On-premises software, net of amortization (2) (3)		8,290		8,749
Other assets, noncurrent		5,390		5,247
Deposits, noncurrent		2,481		2,707
Other long-term assets	$	51,949	$	32,774

(1) Capitalized stock-based compensation expense, which is included in these amounts, was $5.9 million and $5.8 million as April 30, 2021 and January 31, 2021, respectively.

(2) The accumulated amortization of capitalized software costs in the aggregate was $14.1 million and $11.2 million as of April 30, 2021 and January 31, 2021, respectively. Amortization expense related to capitalized software was $3.0 million and $1.9 million for the three months ended April 30, 2021 and 2020, respectively. We have not recorded any material impairment charges during the periods presented.

(3) The estimated useful lives of on-premises software range from three to four years.

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Leases

3 Months Ended

Apr. 30, 2021

Leases [Abstract]

Leases

Note 5. Leases

We have entered into various non-cancellable operating lease agreements for certain of our offices and data centers with lease periods expiring primarily between fiscal years 2022 and 2029. Certain of these arrangements have free or escalating rent payment provisions and optional renewal or termination clauses. Our operating leases typically include variable lease payments, which are primarily comprised of common area maintenance and utility charges for our offices and power and network connections for our data centers, that are determined based on actual consumption. Our operating lease agreements do not contain any residual value guarantees, covenants, or other restrictions.  

We have also entered into various finance lease arrangements to obtain servers and related equipment for our data center operations. These agreements are primarily for four years and certain of these arrangements have optional renewal or termination clauses. The leases are secured by the underlying leased servers and related equipment.

We sublease certain floors of our Redwood City, San Francisco, and London offices. Our current subleases have total lease terms ranging from 11 to 96 months that will expire at various dates by fiscal year 2025.

The components of lease cost, which were included in operating expenses in our condensed consolidated statements of operations, were as follows (in thousands):

	Three Months Ended
	April 30,
	2021			2020
Finance lease cost:
Amortization of finance lease right-of-use assets	$	13,082		$	13,106
Interest on finance lease liabilities		1,171			1,526
Operating lease cost, gross		13,780			13,117
Variable lease cost, gross		2,302			2,724
Sublease income		(3,194	)		(2,808	)
Total lease cost (1)	$	27,141		$	27,665

(1) Short-term lease cost was not material for the periods presented and is not included in the table above.

As of April 30, 2021, maturities of our operating and finance lease liabilities, which do not include short-term leases and variable lease payments, are as follows (in thousands):

Years ending January 31:	Operating Leases (1)			Finance Leases
Remainder of 2022	$	41,742		$	38,898
2023		49,593			42,041
2024		48,126			19,584
2025		32,476			1,573
2026		28,391			—
Thereafter		63,616			—
Total lease payments	$	263,944		$	102,096
Less: imputed interest	$	(37,715	)	$	(5,109	)
Present value of total lease liabilities	$	226,229		$	96,987

(1) Non-cancellable sublease proceeds for the remainder of the fiscal year ending January 31, 2022 and the fiscal years ending January 31, 2023, 2024, and 2025 of $6.6 million, $8.8 million, $2.3 million, and $2.1 million, respectively, are not included in the table above.

We establish assets and liabilities for the present value of estimated future costs to return certain of our leased facilities to their original condition. Such assets are depreciated over the lease period into operating expense, and the recorded liabilities are accreted to the future value of the estimated restoration costs. The present value of our estimated asset retirement obligation for our headquarters facility, which is recorded in other long-term liabilities, was $3.1 million as of April 30, 2021 and January 31, 2021. The accretion expense, which was included in operating expenses in our condensed consolidated statements of operations, was not material for all periods presented.

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Acquisitions

3 Months Ended

Apr. 30, 2021

Business Combinations [Abstract]

Acquisitions

Note 6. Acquisitions

The purchase price allocation is preliminary. The Company continues to collect information with regard to its estimates and assumptions, including potential liabilities and contingencies. The Company will record adjustments to the fair value of the net assets acquired and goodwill within the twelve months measurement period, if necessary.

SignRequest B.V.

On February 8, 2021, we completed the acquisition of SignRequest B.V. (SignRequest), an e-signature provider, for total aggregate consideration of $54.3 million comprised of a combination of cash and shares of our Class A common stock. Box acquired SignRequest to develop Box Sign, an e-signature capability that will be developed on Sign-Request’s technology and natively integrated into Box.

The consideration paid was $44.3 million of cash and 550,366 shares of our Class A common stock valued at $10.0 million.

Under the acquisition method of accounting, the total final purchase price was allocated to SignRequest’s net tangible and intangible assets based upon their estimated fair values as of the acquisition date. The excess purchase price over the value of the net tangible and identifiable intangible assets was recorded as goodwill. Of the total purchase price, $43.4 million was allocated to goodwill, $14.9 million to the acquired developed technology, $2.5 million to deferred tax liability and the remainder to net liabilities assumed which were not material. The goodwill recognized was primarily attributed to increased synergies that are expected to be achieved from the integration of the acquired developed technology into the Box service. Goodwill is non-deductible for tax purposes.

Cloud FastPath

On February 16, 2021, we purchased certain assets and assumed certain liabilities of, and hired certain employees from, Cloud FastPath, a cloud-based content migration solution, for total consideration of $14.8 million paid in cash. We entered into this agreement with Cloud FastPath to supplement and enhance Box Shuttle, our full-service content migration program.

The fair value of the consideration transferred on the date of purchase totaled $14.8 million, which consisted of cash consideration of $12.4 million and $2.4 million which has been held back for fifteen months from the date of purchase to secure the indemnification obligations of the Seller.

Under the acquisition method of accounting, the total final purchase price was allocated to Cloud FastPath’s net tangible and intangible assets based on their estimated fair values as of the date of purchase. The excess purchase price over the value of the net tangible and identifiable intangible assets was recorded as goodwill. Of the total purchase price, $13.2 million was allocated to goodwill, $5.8 million to the acquired developed technology, $4.8 million to deferred revenue and the remainder to net assets assumed which were not material. The goodwill recognized was primarily attributed to increased synergies that are expected to be achieved from the integration of the acquired developed technology into the Box service. Goodwill is deductible for tax purposes.

Results of operations for these acquisitions have been included in our condensed consolidated statements of operations since the acquisition dates and were not material. Pro forma results of operations for these acquisitions have not been presented because they were also not material to the consolidated results of operations.

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Goodwill and Acquired Intangible Assets

3 Months Ended

Apr. 30, 2021

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Acquired Intangible Assets

Note 7. Goodwill and Acquired Intangible Assets

Goodwill activity for the three months ended April 30, 2021 is reflected in the following table (in thousands):

Balance as of January 31, 2021	$	18,740
Goodwill acquired - SignRequest		43,386
Goodwill acquired - Cloud FastPath		13,230
Foreign currency translation		241
Balance as of April 30, 2021	$	75,597

We did not record any goodwill impairment during the three months ended April 30, 2021. There were no additions or impairment to goodwill during the three months ended April 30, 2020.

Acquired intangible assets consisted of the following (in thousands):

	Weighted-Average Remaining Useful Life (Years)		Gross Value		Accumulated Amortization			Net Carrying Value
Balance as of January 31, 2021			$	—	$	—		$	—
Developed technology		4.22		20,682		(901	)		19,781
Balance as of April 30, 2021			$	20,682	$	(901	)	$	19,781

Acquired intangible assets are amortized on a straight-line basis over the useful life. Acquired intangible assets amortization was $0.9 million for the three months ended April 30, 2021. We did not record any acquired intangible assets amortization during the three months ended April 30, 2020. Amortization of acquired developed technology is included in cost of revenue in the condensed consolidated statements of operations.

As of April 30, 2021, expected amortization expense for acquired intangible assets was as follows (in thousands):

Fiscal years ending January 31:
Remainder of 2022	$	3,860
2023		4,912
2024		4,912
2025		3,064
2026		2,976
Thereafter		57
Total	$	19,781

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Commitments and Contingencies

3 Months Ended

Apr. 30, 2021

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 8. Commitments and Contingencies

Letters of Credit

As of April 30, 2021 and January 31, 2021, we had letters of credit in the aggregate amount of $27.0 million in connection with our operating leases and voluntary disability insurance (VDI) program, which were primarily issued under the available sublimit for the issuance of letters of credit in conjunction with a secured credit agreement as disclosed in Note 9.

Purchase Obligations

As of April 30, 2021, future payments under non-cancellable contractual purchases, which were not recognized on our condensed consolidated balance sheet and relate primarily to infrastructure services and IT software and support services costs, are as follows, shown in accordance with the payment due date (in thousands):

Fiscal years ending January 31:
Remainder of 2022	$	7,363
2023		38,104
2024		4,860
2025		434
2026		211,234
Thereafter		—
	$	261,995

Our contracts for infrastructure services and IT software, which have terms ranging from 2 to 8 years, support our long-term goals of improving gross margin. In addition to the purchase obligations included above, as of April 30, 2021, we recognized a total of $9.2 million related to non-cancellable contractual purchases, which were included in accounts payable, accrued expenses and other current liabilities, and other long-term liabilities on the condensed consolidated balance sheet. $3.5 million, $3.8 million, and $1.9 million is due to be paid in the remainder of the fiscal year ending January 31, 2022 and the fiscal years ending January 31, 2023 and 2024, respectively.

Legal Matters

From time to time, we are subject to claims that arise in the ordinary course of business, including matters we initiate to defend ourselves or our users by determining the scope, enforceability, and validity of third-party proprietary rights or to establish our proprietary rights. We investigate these claims as they arise and accrue estimates for resolution of legal and other contingencies when losses are probable and estimable. Although the results of litigation and claims cannot be predicted with certainty, we believe there was not at least a reasonable possibility that we had incurred a material loss with respect to such loss contingencies as of April 30, 2021. Additionally, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors, regardless of the outcome of such litigation.

Indemnification

We include service level commitments to our customers warranting certain levels of uptime reliability and performance and permitting those customers to receive credits in the event that we fail to meet those levels. In addition, our customer contracts often include (i) specific obligations that we maintain the availability of the customer’s data through our service and that we secure customer content against unauthorized access or loss, and (ii) indemnity provisions whereby we indemnify our customers for third-party claims asserted against them that result from our failure to maintain the availability of their content or securing the same from unauthorized access or loss. To date, we have not incurred any material costs as a result of such commitments.

Our arrangements generally include certain provisions for indemnifying customers against liabilities if our products or services infringe a third party’s intellectual property rights. It is not possible to determine the maximum potential amount under these indemnification obligations due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. To date, we have not incurred any material costs as a result of such obligations and have not accrued any material liabilities related to such obligations in the condensed consolidated financial statements. In addition, we indemnify our officers, directors and certain key employees while they are serving in good faith in their respective capacities. To date, there have been no claims under any indemnification provisions.

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Debt

3 Months Ended

Apr. 30, 2021

Debt Disclosure [Abstract]

Debt

Note 9. Debt

Convertible Senior Notes

In January 2021, we issued $345.0 million aggregate principal amount of 0.00% convertible senior notes due January 15, 2026. The Notes are senior unsecured obligations and do not bear regular interest. Each $1,000 principal amount of the Notes will initially be convertible into 38.7665 shares of our Class A common stock, which is equivalent to an initial conversion price of approximately $25.80 per share, subject to adjustment upon the occurrence of specified events.

The Notes are convertible at the option of the holders of the Notes at any time prior to the close of business on the business day immediately preceding October 15, 2025, only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on April 30, 2021 (and only during such fiscal quarter), if the last reported sale price of our Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five-business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Class A common stock and the conversion rate for the Notes on each such trading day; (3) if we call the Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events.

On or after October 15, 2025, holders of the Notes may convert all or any portion of their Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions. Effective February 5, 2021, we have made an irrevocable election to settle the principal portion of the Notes only in cash. Accordingly, upon conversion, we will pay the principal portion 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 the Company’s election.

We may not redeem the Notes prior to January 20, 2024. We may redeem for cash all or any portion of the Notes, at our option, on or after January 20, 2024, if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus any accrued and unpaid special interest to, but excluding the redemption date.

Upon the occurrence of a fundamental change (as defined in the indenture governing the Notes) prior to the maturity date, subject to certain conditions, holders of the Notes may require us to repurchase all or a portion of the Notes for cash at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid special interest to, but excluding, the fundamental change repurchase date.

As of April 30, 2021, the conditions allowing holders of the Notes to convert were not met.

The net carrying amount of the Notes consists of the following (in thousands):

	April 30,			January 31,
	2021			2021
Principal	$	345,000		$	345,000
Unamortized debt discount for conversion option		—			(69,916	)
Unamortized issuance costs		(8,939	)		(7,470	)
Net carrying amount	$	336,061		$	267,614

Issuance costs are being amortized to interest expense over the term of the Notes using the effective interest rate method. The effective interest rate used to amortize the issuance costs was 0.56%. For the three months ended April 30, 2021, the interest expense recognized related to the Notes was $0.5 million.

Capped Calls

In connection with the pricing of the Notes, we entered into privately negotiated capped call transactions with certain counterparties (Capped Calls). The Capped Calls each have an initial strike price of approximately $25.80 per share, subject to certain adjustments, which correspond to the initial conversion price of the Notes. The Capped Calls have initial cap prices of $35.58 per share, subject to certain adjustments. The Capped Calls cover, subject to anti-dilution adjustments, approximately 13.4 million shares

of our Class A common stock. Conditions that cause adjustments to the initial strike price of the Capped Calls are similar to the conditions that result in corresponding adjustments for the Notes. The Capped Calls are generally intended to reduce or offset the potential dilution to our common stock upon any conversion of the Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. The Capped Calls are separate transactions, and not part of the terms of the Notes. As these transactions meet certain accounting criteria, the Capped Calls are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of $27.8 million incurred in connection with the Capped Calls was recorded as a reduction to additional paid-in capital.

Line of Credit

On November 27, 2017, we entered into a secured credit agreement (as amended or otherwise modified from time to time, the November 2017 Facility). The maturity date of borrowings under the November 2017 Facility is July 12, 2022, the revolving commitment is $100.0 million, and it provides for a sublimit for the issuance of letters of credit of $45.0 million. The November 2017 Facility limits the amount of finance leases and debt that we can incur to $200.0 million, and allows for the issuance of debt constituting convertible debt securities of $350.0 million so long as the total leverage ratio does not exceed 6.00 to 1.00. The revolving loans accrue interest at a prime rate plus a margin of 0.25% or, at our option, a LIBOR rate (based on one, three or six-month interest periods) plus a margin of 1.00%. Borrowings under the November 2017 Facility are collateralized by substantially all of our assets. The November 2017 Facility requires us to comply with a maximum leverage ratio and a minimum liquidity requirement.  Additionally, the November 2017 Facility contains customary affirmative and negative covenants.

As of April 30, 2021, we had total debt outstanding with a carrying amount of $30.0 million and we were in compliance with all financial covenants.

Derivative Instruments and Hedging

In association with our November 2017 Facility, we are required to make variable rate interest payments based on a contractually specified interest rate index (e.g., LIBOR). The variable rate interest payments create interest rate risk as interest payments will fluctuate based on changes in the contractually specified interest rate index over the life of the loan. To minimize our risk exposure due to the volatility of the interest rate index, we entered into an interest rate swap agreement with Wells Fargo Bank, National Association, effective as of September 5, 2019 (Swap Agreement). This agreement, which is designated as a cash flow hedge, has a maturity of five years. Under the Swap Agreement, we have hedged a portion of the variable interest payments by effectively fixing our interest payments over the term of the agreement. As of April 30, 2021, our interest rate swap had a notional value of $30.0 million.

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Stock-Based Compensation

3 Months Ended

Apr. 30, 2021

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

Note 10. Stock-Based Compensation

Employee Equity Plans

In January 2015, our board of directors adopted the 2015 Equity Incentive Plan (2015 Plan), which became effective prior to the completion of our initial public offering (IPO). Awards granted under the 2015 Plan may be (i) incentive stock options, (ii) nonstatutory stock options, (iii) restricted stock units, (iv) restricted stock awards or (v) stock appreciation rights, as determined by our board of directors at the time of grant. Generally, our restricted stock units vest over four years and, (a) for employee new hire restricted stock unit grants, twenty-five percent vest one year from the vesting commencement date and continue to vest 1/16th per quarter thereafter; or (b) for employee refresh restricted stock unit grants, 1/16th per quarter vest from the vesting commencement date. As of April 30, 2021, 26,683,430 shares were reserved for future issuance under the 2015 Plan.

In January 2015, our board of directors adopted the 2015 Employee Stock Purchase Plan (2015 ESPP), which became effective prior to the completion of our IPO. The 2015 ESPP allows eligible employees to purchase shares of our Class A common stock at a discount of up to 15% through payroll deductions of their eligible compensation, subject to any plan limitations. The 2015 ESPP provides for 24-month offering periods beginning March 16 and September 16 of each year, and each offering period consists of four six-month purchase periods.

On each purchase date, eligible employees may purchase our stock at a price per share equal to 85% of the lesser of (1) the fair market value of our stock on the offering date or (2) the fair market value of our stock on the purchase date. In the event the price is lower on the last day of any purchase price period, in addition to using that price as the basis for that purchase period, the offering period resets and the new lower price becomes the new offering price for a new 24 month offering period. As of April 30, 2021, 1,356,993 shares were reserved for future issuance under the 2015 ESPP.

Stock Options

The following table summarizes the stock option activity under the equity incentive plans and related information:

	Shares Subject to Options Outstanding					Weighted- Average
				Weighted-		Remaining
				Average Exercise		Contractual Life		Aggregate
	Shares			Price		(Years)		Intrinsic Value
								(in thousands)
Balance as of January 31, 2021		6,617,037		$	10.77		3.77	$	48,098
Options granted		—			—
Options exercised		(175,460	)		7.73
Options forfeited/cancelled		—			—
Balance as of April 30, 2021		6,441,577		$	10.85		3.55	$	67,482
Vested and expected to vest as of April 30, 2021		6,381,107		$	10.76		3.52	$	67,406
Exercisable as of April 30, 2021		5,224,876		$	8.71		2.66	$	65,940

The aggregate intrinsic value of options vested and expected to vest and exercisable as of April 30, 2021 is calculated based on the difference between the exercise price and the current fair value of our common stock. The aggregate intrinsic value of exercised options for the three months ended April 30, 2021 and 2020 was $2.5 million and $2.2 million, respectively. The aggregate estimated fair value of stock options granted to employees that vested during the three months ended April 30, 2021 and 2020 was $0.4 million and $0.5 million, respectively. There were no options granted to employees during the three months ended April 30, 2021. The weighted-average grant date fair value of options granted to employees during the three months ended April 30, 2020 was $5.41 per share.

As of April 30, 2021, there was $1.2 million of unrecognized stock-based compensation expense related to outstanding stock options granted to employees that is expected to be recognized over a weighted-average period of 1.38 years.

Stock Options with Market-Based Performance Goals

To further align our stockholders’ interests with executive officers’ interests, the Compensation Committee of our board of directors approved and granted performance-based stock options with market-based performance goals under the 2015 Plan to certain executive officers, which are subject to both the achievement of the market-based performance goal established by the Compensation Committee and the continued employment of the participant. These performance-based stock options were awarded during our fiscal years ending January 31, 2018, 2019, and 2020, and vest only to the extent that both the market-based performance goal and time-based condition are satisfied. As of April 30, 2021, the total outstanding balance of performance-based stock options was 1,375,000.

The grant date fair value of these awards was determined using a Monte Carlo valuation model and the related stock-based compensation expense is recognized based on an accelerated attribution method. Of the total $1.2 million in unrecognized stock-based compensation expense for stock options as of April 30, 2021, $0.7 million related to outstanding performance-based stock options with market-based performance goals, which is expected to be recognized over a weighted-average period of 1.67 years.

Restricted Stock Units

The following table summarizes the restricted stock unit activity under the equity incentive plans and related information:

	Number of			Weighted-
	Restricted			Average
	Stock Units			Grant Date
	Outstanding			Fair Value
Unvested balance - January 31, 2021		14,330,678		$	17.68
Granted		7,003,448			23.65
Vested, net of shares withheld for employee payroll taxes		(1,206,102	)		19.75
Forfeited/cancelled, including shares withheld for employee payroll taxes		(1,915,467	)		18.46
Unvested balance - April 30, 2021		18,212,557		$	19.75

As of April 30, 2021, there was $339.3 million of unrecognized stock-based compensation expense related to outstanding restricted stock units granted to employees that is expected to be recognized over a weighted-average period of 2.98 years.

Performance-Based Restricted Stock Units

We use performance-based incentives for certain employees, including our named executive officers, to achieve our annual financial and operational objectives, while making progress towards our longer-term strategic and growth goals. Typically, near the beginning of each fiscal year, our Compensation Committee adopts the performance criteria and targets for the incentive compensation plan for that fiscal year, which identifies the plan participants, the performance measures and the associated target levels for each measure, and the potential payouts based on actual performance for the fiscal year. 

In the first quarter of fiscal year 2021, our Compensation Committee adopted and approved the performance criteria and targets for fiscal year 2021 under our omnibus Executive Incentive Plan (the Fiscal 2021 Executive Bonus Plan). Based on a review of our actual achievement of pre-established corporate financial objectives and additional inputs from our Compensation Committee, the Fiscal 2021 Executive Bonus Plan was determined, settled and paid out in the first quarter of fiscal year 2022 in the form of fully vested restricted stock units. During the first quarter of fiscal year 2022, we recognized stock-based compensation expense related to the Fiscal 2021 Executive Bonus Plan in the amount of $3.2 million.

In the first quarter of fiscal year 2022, our Compensation Committee adopted and approved the performance criteria and targets for fiscal year 2022 under our omnibus Executive Plan (the Fiscal 2022 Executive Bonus Plan). The Fiscal 2022 Executive Bonus Plan provides opportunities for 100% equity incentive compensation payouts based on our actual achievement of pre-established corporate financial objectives, subject to review and a final approval by our Compensation Committee. During the three months ended April 30, 2021, we recognized stock-based compensation expense related to the Fiscal 2022 Executive Bonus Plan in the amount of $2.6 million. The unrecognized compensation expense related to the ungranted and unvested Fiscal 2022 Executive Bonus Plan is $9.0 million, based on the expected performance against the pre-established corporate financial objectives as of April 30, 2021, which is expected to be recognized over a remaining weighted-average period of less than one year. The payouts of the Fiscal 2022 Executive Bonus Plan are expected to be made in the form of fully vested restricted stock units in the first quarter of fiscal year 2023.

2015 ESPP

As of April 30, 2021, there was $25.4 million of unrecognized stock-based compensation expense related to the 2015 ESPP that is expected to be recognized over the remaining term of the respective offering periods.

Stock-Based Compensation

The following table summarizes the components of stock-based compensation expense recognized in the condensed consolidated statements of operations (in thousands):

	Three Months Ended
	April 30,
	2021		2020
Cost of revenue	$	5,340	$	4,541
Research and development		15,453		17,287
Sales and marketing		11,551		10,079
General and administrative		9,446		8,136
Total stock-based compensation	$	41,790	$	40,043

Determination of Fair Value

We estimated the fair value of employee stock options and 2015 ESPP purchase rights using a Black-Scholes option pricing model with the following assumptions.

	Three Months Ended
	April 30,
	2021					2020
Employee Stock Options
Expected term (in years)				N/A						5.8
Risk-free interest rate				N/A						0.6	%
Volatility				N/A						46	%
Dividend yield				N/A						0	%
Employee Stock Purchase Plan
Expected term (in years)		0.5	-		2.0		0.5		-	2.0
Risk-free interest rate	0.1%		-	0.2%			0.3	%	-	0.4	%
Volatility	42%		-	52%			44	%	-	52	%
Dividend yield				0%						0	%

The assumptions used in the Black-Scholes option pricing model were determined as follows:

Fair Value of Common Stock. We use the market closing price for our Class A common stock as reported on the New York Stock Exchange to determine the fair value of our common stock at each grant date.

Expected Term. The expected term represents the period that our share-based awards are expected to be outstanding. The expected term assumptions were determined based on the vesting terms, exercise terms and contractual lives of the options and 2015 ESPP purchase rights.

Expected Volatility. We estimate the expected volatility of the stock option grants and 2015 ESPP purchase rights based on the historical volatility of our Class A common stock over a period equivalent to the expected term of the stock option grants and 2015 ESPP purchase rights, respectively.

Risk-free Interest Rate. The risk-free rate that we use is based on the implied yield available on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options and 2015 ESPP purchase rights.

Dividend Yield. We have never declared or paid any cash dividends and do not plan to pay cash dividends in the foreseeable future, and, therefore, use an expected dividend yield of zero.

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Net Loss Per Share

3 Months Ended

Apr. 30, 2021

Earnings Per Share [Abstract]

Net Loss per Share

Note 11. Net Loss per Share

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share amounts):

	Three Months Ended April 30,
	2021			2020
Numerator:
Net loss	$	(14,573	)	$	(25,550	)
Denominator:
Weighted-average number of shares outstanding—basic and diluted		161,733			151,943
Net loss per share—basic and diluted	$	(0.09	)	$	(0.17	)

The following weighted-average outstanding shares of common stock equivalents were excluded from the computation of diluted net loss per share for the periods presented because the impact of including them would have been antidilutive (in thousands):

	Three Months Ended April 30,
	2021		2020
Options to purchase common stock		5,369		5,624
Restricted stock units		15,471		16,863
Employee stock purchase plan		1,743		2,678
Shares related to the convertible senior notes		601		—
Total		23,184		25,165

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Income Taxes

3 Months Ended

Apr. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Note 12. Income Taxes

We evaluate tax positions for recognition using a more-likely-than-not recognition threshold, and those tax positions eligible for recognition are measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon the effective settlement with a taxing authority that has full knowledge of all relevant information. We believe that we have provided adequate reserves for our income tax uncertainties in all open tax years.

We file tax returns in the U.S. for federal, California, and other states. All tax years remain open to examination for both federal and state purposes as a result of our net operating loss and credit carryforwards. We began to file foreign tax returns in the United Kingdom starting with the year ended January 31, 2013, in France, Germany and Japan starting with the year ended January 31, 2014, in Canada starting with the year ended January 31, 2015, and in Australia, Sweden, and Netherlands starting with the year ended January 31, 2016. Certain tax years remain open to examination.

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Segments

3 Months Ended

Apr. 30, 2021

Segment Reporting [Abstract]

Segments

Note 13. Segments

Our chief operating decision maker reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. As such, we have a single reporting segment and operating unit structure. Since we operate in one operating segment, all required segment information can be found in the condensed consolidated financial statements.

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Subsequent Events

3 Months Ended

Apr. 30, 2021

Subsequent Events [Abstract]

Subsequent Events

Note 14. Subsequent Events

On April 7, 2021, we entered into an investment agreement (Investment Agreement) with certain investment funds which are managed or advised by KKR Credit Advisors (US) LLC or Affiliates thereto (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 “Issuance”).

Prior to the consummation of the Issuance and as expressly contemplated by the Investment Agreement, KKR elected to syndicate a portion of the investment to certain investment partners. Each of the KKR-led group agreed to become a “party”, “Permitted Investor Transferee”, and “Investor Party” under the Investment Agreement.

The closing of the Issuance occurred on May 12, 2021.

On June 2, 2021 we announced the commencement of a “modified Dutch Auction” tender offer to purchase up to $500 million in value of shares of our Class A common stock, or such lesser number of shares of our Class A common stock as are properly tendered and not properly withdrawn, at a price not less than $22.75 nor greater than $25.75 per share, to the seller in cash, less any applicable withholding taxes and without interest. The tender offer is scheduled to expire at 12:00 midnight, New York City time, at the end of the day on June 29, 2021, unless the offer is extended or terminated. We expect to use substantially all of the proceeds from the Issuance to fund our purchase of shares pursuant to the tender offer.

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Description of Business and Basis of Presentation (Policies)

3 Months Ended

Apr. 30, 2021

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying condensed consolidated balance sheet as of April 30, 2021 and the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive loss, the condensed consolidated statements of stockholders’ equity, and the condensed consolidated statements of cash flows for the three months ended April 30, 2021 and 2020, respectively, are unaudited. The condensed consolidated balance sheet data as of January 31, 2021 was derived from the audited consolidated financial statements that are included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2021 (the Form 10-K), which was filed with the Securities and Exchange Commission (the SEC) on March 19, 2021. The accompanying statements should be read in conjunction with the audited consolidated financial statements and related notes contained in our Form 10-K. Other than items discussed under Use of Estimates and Recently Adopted Accounting Pronouncements, there have been no other material changes to our critical accounting policies and estimates during the three months ended April 30, 2021 from those disclosed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K.

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information. Accordingly, they do not include all of the financial information and footnotes required by GAAP for complete financial statements. In the opinion of our management, the unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements in the Form 10-K and include all adjustments necessary for the fair presentation of our balance sheet as of April 30, 2021, and our results of operations, including our comprehensive loss, our stockholders’ equity, and our cash flows for the three months ended April 30, 2021 and 2020. All adjustments are of a normal recurring nature. The results for the three months ended April 30, 2021 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending January 31, 2022.

Certain prior period amounts reported in our condensed consolidated financial statements and notes thereto have been reclassified to conform to the current year presentation. Such reclassifications did not affect total revenues, operating income, or net income.

Use of Estimates

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make, on an ongoing basis, estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ from these estimates. Such estimates include, but are not limited to, the determination of the allowance for accounts receivable, fair value of acquired intangible assets and goodwill, useful lives of acquired intangible assets and property and equipment, timing and costs associated with our asset retirement obligations, the nature and timing of satisfaction of performance obligations, estimate of standalone selling price allocation included in contracts with multiple performance obligations, the estimated expected benefit period for deferred commissions, the estimated useful life of capitalized internal-use software costs, observable price changes of non-marketable equity securities, fair value of derivative instruments, the incremental borrowing rate we use to determine our lease liabilities, fair values of stock-based awards, legal contingencies, the valuation of deferred income tax assets, and unrecognized tax benefits, among others. Management bases its estimates on historical experience and on various other assumptions which management believes to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.   

Certain Risks and Concentrations

Certain Risks and Concentrations

Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments, and accounts receivable. Although we deposit our cash with multiple financial institutions, our deposits, at times, may exceed deposit insurance coverage limits.

We sell to a broad range of customers. Our revenue is derived primarily from the United States across a multitude of industries. Accounts receivable are derived from the delivery of our services to customers primarily located in the United States. We accept and settle our accounts receivable using credit cards, electronic payments and checks. A majority of our lower dollar value invoices are settled by credit card on or near the date of the invoice. We do not require collateral from customers to secure accounts receivable. We maintain an allowance for doubtful accounts based upon the expected collectability, which takes into consideration specific customer creditworthiness and current economic trends. We believe collections of our accounts receivable are probable based on the size, industry diversification, financial condition and past transaction history of our customers. As of April 30, 2021 and January 31, 2021, one reseller, which is also a customer, accounted for more than 10% of total accounts receivable. No single customer represented over 10% of our revenue for the three months ended April 30, 2021 and 2020.

We serve our customers and users from data center facilities operated by third parties. In order to reduce the risk of down time of our subscription services, we have established data centers and third-party cloud computing and hosting providers in various locations in the United States and abroad. We have internal procedures to restore services in the event of disaster at any one of our current data center facilities. Even with these procedures for disaster recovery in place, our cloud services could be significantly interrupted during the implementation of the procedures to restore services.

Geographic Locations

For the three months ended April 30, 2021 and 2020, revenue attributable to customers in the United States was 69% and 73%, respectively. For the three months ended April 30, 2021 and 2020, revenue attributable to customers in Japan was 17% and 13%, respectively.

Substantially all of our net assets are located in the United States. As of April 30, 2021 and January 31, 2021, property and equipment located in the United States was approximately 96%.

Recently Adopted and Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (FASB) issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and by improving consistent application of other areas of Topic 740. We adopted the new standard, effective February 1, 2021, and the adoption did not have a material impact on our consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06 (ASU 2020-06), Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). The amendments in this update were implemented by the FASB to reduce the number of accounting models for convertible debt instruments. Under ASU 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument is accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. There is no longer a debt discount representing the difference between the carrying value, excluding issuance costs, and the principal of the convertible debt instrument and, as a result, there is no longer interest expense from the amortization of the debt discount over the term of the convertible debt instrument. The amendments in this update also require the if-converted method to be applied for all convertible instruments when calculating diluted earnings per share. We early adopted the new standard, effective February 1, 2021, using the modified retrospective method. The comparative periods presented and disclosed in the year of adoption are based on legacy guidance.

Adoption Impact of ASU 2020-06 on the Opening Balance Sheet as of February 1, 2021

In connection with the adoption of ASU 2020-06, we recognized a $0.6 million decrease of accumulated deficit, a $68.6 million decrease of additional paid-in capital, and a $68.0 million increase of debt, net, noncurrent. The adoption of ASU 2020-06 did not have a material effect on our condensed consolidated statements of operations and cash flows.

Recently Issued Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. Reference rate reform refers to the global transition away from certain reference rates, such as the London Interbank Offered Rate (LIBOR), and to the introduction of new reference rates that are based on a larger and more liquid

population of observable transactions. ASU 2020-04 provides temporary optional expedients and exceptions for applying GAAP to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued as a result of reference rate reform. The amendments in this ASU were effective upon issuance do not have a material impact on our condensed consolidated financial statements.

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Other than items discussed under Use of Estimates and Recently Adopted Accounting Pronouncements, there have been no material changes to our critical accounting policies during the three months ended April 30, 2021 from those disclosed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K for the fiscal year ended January 31, 2021.

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Fair Value Measurements (Tables)

3 Months Ended

Apr. 30, 2021

Fair Value Disclosures [Abstract]

Summary of Financial Assets Subject to Fair Value

Financial assets subject to the fair value disclosure requirements were as follows (in thousands):    

	April 30, 2021
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	324,926	$	—	$	—	$	324,926
	January 31, 2021
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	256,861	$	—	$	—	$	256,861

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Balance Sheet Components (Tables)

3 Months Ended

Apr. 30, 2021

Balance Sheet Related Disclosures [Abstract]

Schedule of Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):

	April 30,		January 31,
	2021		2021
Prepaid expenses	$	21,551	$	11,672
Capitalized qualifying implementation costs incurred in a hosting arrangement that is a service contract, net of amortization (1)		1,802		1,672
Other current assets		3,018		3,441
Total prepaid expenses and other current assets	$	26,371	$	16,785

(1) Capitalized stock-based compensation expense, which is included in these amounts, was not material for the periods presented. The accumulated amortization of the capitalized costs was $1.6 million and $1.4 million as of April 30, 2021 and January 31, 2021, respectively. Amortization expense related to capitalized costs was not material for the three months ended April 30, 2021 and 2020. We have not recorded any material impairment charges during the periods presented.

Schedule of Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

	April 30,			January 31,
	2021			2021
Servers and related equipment	$	354,999		$	352,224
Leasehold improvements		78,289			80,558
Computer hardware		21,689			25,810
Furniture and fixtures		13,998			14,157
Construction in progress		9,955			11,422
Total property and equipment		478,930			484,171
Less: accumulated depreciation		(332,830	)		(324,023	)
Total property and equipment, net	$	146,100		$	160,148

Schedule of Operating Lease Right-of-Use Assets, Net

Operating lease right-of-use assets, net consisted of the following (in thousands):

	April 30,			January 31,
	2021			2021
Operating lease right-of-use assets	$	270,331		$	270,428
Less: accumulated amortization		(86,930	)		(76,175	)
Operating lease right-of-use assets, net	$	183,401		$	194,253

Schedule of Other Long-Term Assets

Other long-term assets consisted of the following (in thousands):

	April 30,		January 31,
	2021		2021
Acquired intangible assets, net of amortization	$	19,781	$	—
Internally developed software costs, net of amortization (1) (2)		16,007		16,071
On-premises software, net of amortization (2) (3)		8,290		8,749
Other assets, noncurrent		5,390		5,247
Deposits, noncurrent		2,481		2,707
Other long-term assets	$	51,949	$	32,774

(1) Capitalized stock-based compensation expense, which is included in these amounts, was $5.9 million and $5.8 million as April 30, 2021 and January 31, 2021, respectively.

(2) The accumulated amortization of capitalized software costs in the aggregate was $14.1 million and $11.2 million as of April 30, 2021 and January 31, 2021, respectively. Amortization expense related to capitalized software was $3.0 million and $1.9 million for the three months ended April 30, 2021 and 2020, respectively. We have not recorded any material impairment charges during the periods presented.

(3) The estimated useful lives of on-premises software range from three to four years.

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Leases (Tables)

3 Months Ended

Apr. 30, 2021

Leases [Abstract]

Summary of Components of Lease Cost

The components of lease cost, which were included in operating expenses in our condensed consolidated statements of operations, were as follows (in thousands):

	Three Months Ended
	April 30,
	2021			2020
Finance lease cost:
Amortization of finance lease right-of-use assets	$	13,082		$	13,106
Interest on finance lease liabilities		1,171			1,526
Operating lease cost, gross		13,780			13,117
Variable lease cost, gross		2,302			2,724
Sublease income		(3,194	)		(2,808	)
Total lease cost (1)	$	27,141		$	27,665

(1) Short-term lease cost was not material for the periods presented and is not included in the table above.

Summary of Maturities of Operating and Finance Lease Liabilities

As of April 30, 2021, maturities of our operating and finance lease liabilities, which do not include short-term leases and variable lease payments, are as follows (in thousands):

Years ending January 31:	Operating Leases (1)			Finance Leases
Remainder of 2022	$	41,742		$	38,898
2023		49,593			42,041
2024		48,126			19,584
2025		32,476			1,573
2026		28,391			—
Thereafter		63,616			—
Total lease payments	$	263,944		$	102,096
Less: imputed interest	$	(37,715	)	$	(5,109	)
Present value of total lease liabilities	$	226,229		$	96,987

(1) Non-cancellable sublease proceeds for the remainder of the fiscal year ending January 31, 2022 and the fiscal years ending January 31, 2023, 2024, and 2025 of $6.6 million, $8.8 million, $2.3 million, and $2.1 million, respectively, are not included in the table above.

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Goodwill and Acquired Intangible Assets (Tables)

3 Months Ended

Apr. 30, 2021

Goodwill And Intangible Assets Disclosure [Abstract]

Summary of Goodwill Activity

Goodwill activity for the three months ended April 30, 2021 is reflected in the following table (in thousands):

Balance as of January 31, 2021	$	18,740
Goodwill acquired - SignRequest		43,386
Goodwill acquired - Cloud FastPath		13,230
Foreign currency translation		241
Balance as of April 30, 2021	$	75,597

Summary of Acquired Intangible Assets

Acquired intangible assets consisted of the following (in thousands):

	Weighted-Average Remaining Useful Life (Years)		Gross Value		Accumulated Amortization			Net Carrying Value
Balance as of January 31, 2021			$	—	$	—		$	—
Developed technology		4.22		20,682		(901	)		19,781
Balance as of April 30, 2021			$	20,682	$	(901	)	$	19,781

Schedule of Expected Amortization Expense for Acquired Intangible Assets

As of April 30, 2021, expected amortization expense for acquired intangible assets was as follows (in thousands):

Fiscal years ending January 31:
Remainder of 2022	$	3,860
2023		4,912
2024		4,912
2025		3,064
2026		2,976
Thereafter		57
Total	$	19,781

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Commitments and Contingencies (Tables)

3 Months Ended

Apr. 30, 2021

Commitments And Contingencies Disclosure [Abstract]

Future Payments under Non-cancellable Contractual Purchases

As of April 30, 2021, future payments under non-cancellable contractual purchases, which were not recognized on our condensed consolidated balance sheet and relate primarily to infrastructure services and IT software and support services costs, are as follows, shown in accordance with the payment due date (in thousands):

Fiscal years ending January 31:
Remainder of 2022	$	7,363
2023		38,104
2024		4,860
2025		434
2026		211,234
Thereafter		—
	$	261,995

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Debt (Tables)

3 Months Ended

Apr. 30, 2021

Debt Disclosure [Abstract]

Schedule of Net Carrying Amounts of Liability and Equity Component of Notes

The net carrying amount of the Notes consists of the following (in thousands):

	April 30,			January 31,
	2021			2021
Principal	$	345,000		$	345,000
Unamortized debt discount for conversion option		—			(69,916	)
Unamortized issuance costs		(8,939	)		(7,470	)
Net carrying amount	$	336,061		$	267,614

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Stock-Based Compensation (Tables)

3 Months Ended

Apr. 30, 2021

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Stock Option Activity Under Equity Incentive Plans and Related Information

The following table summarizes the stock option activity under the equity incentive plans and related information:

	Shares Subject to Options Outstanding					Weighted- Average
				Weighted-		Remaining
				Average Exercise		Contractual Life		Aggregate
	Shares			Price		(Years)		Intrinsic Value
								(in thousands)
Balance as of January 31, 2021		6,617,037		$	10.77		3.77	$	48,098
Options granted		—			—
Options exercised		(175,460	)		7.73
Options forfeited/cancelled		—			—
Balance as of April 30, 2021		6,441,577		$	10.85		3.55	$	67,482
Vested and expected to vest as of April 30, 2021		6,381,107		$	10.76		3.52	$	67,406
Exercisable as of April 30, 2021		5,224,876		$	8.71		2.66	$	65,940

Summary of Restricted Stock Unit Activity Under Equity Incentive Plans and Related Information

The following table summarizes the restricted stock unit activity under the equity incentive plans and related information:

	Number of			Weighted-
	Restricted			Average
	Stock Units			Grant Date
	Outstanding			Fair Value
Unvested balance - January 31, 2021		14,330,678		$	17.68
Granted		7,003,448			23.65
Vested, net of shares withheld for employee payroll taxes		(1,206,102	)		19.75
Forfeited/cancelled, including shares withheld for employee payroll taxes		(1,915,467	)		18.46
Unvested balance - April 30, 2021		18,212,557		$	19.75

Summary of Components of Stock-Based Compensation Expense

The following table summarizes the components of stock-based compensation expense recognized in the condensed consolidated statements of operations (in thousands):

	Three Months Ended
	April 30,
	2021		2020
Cost of revenue	$	5,340	$	4,541
Research and development		15,453		17,287
Sales and marketing		11,551		10,079
General and administrative		9,446		8,136
Total stock-based compensation	$	41,790	$	40,043

Summary of Estimated Fair Value of Employee Stock Options and 2015 ESPP

We estimated the fair value of employee stock options and 2015 ESPP purchase rights using a Black-Scholes option pricing model with the following assumptions.

	Three Months Ended
	April 30,
	2021					2020
Employee Stock Options
Expected term (in years)				N/A						5.8
Risk-free interest rate				N/A						0.6	%
Volatility				N/A						46	%
Dividend yield				N/A						0	%
Employee Stock Purchase Plan
Expected term (in years)		0.5	-		2.0		0.5		-	2.0
Risk-free interest rate	0.1%		-	0.2%			0.3	%	-	0.4	%
Volatility	42%		-	52%			44	%	-	52	%
Dividend yield				0%						0	%

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Net Loss Per Share (Tables)

3 Months Ended

Apr. 30, 2021

Earnings Per Share [Abstract]

Summary of Computation of Basic and Diluted Net Loss Per Share

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share amounts):

	Three Months Ended April 30,
	2021			2020
Numerator:
Net loss	$	(14,573	)	$	(25,550	)
Denominator:
Weighted-average number of shares outstanding—basic and diluted		161,733			151,943
Net loss per share—basic and diluted	$	(0.09	)	$	(0.17	)

Summary of Weighted Average Outstanding Shares Excluded from Computation of Diluted Net Loss per Share

The following weighted-average outstanding shares of common stock equivalents were excluded from the computation of diluted net loss per share for the periods presented because the impact of including them would have been antidilutive (in thousands):

	Three Months Ended April 30,
	2021		2020
Options to purchase common stock		5,369		5,624
Restricted stock units		15,471		16,863
Employee stock purchase plan		1,743		2,678
Shares related to the convertible senior notes		601		—
Total		23,184		25,165

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Description of Business and Basis of Presentation - Additional Information (Details) - USD ($) $ in Thousands		3 Months Ended		12 Months Ended
	Feb. 01, 2021	Apr. 30, 2021	Apr. 30, 2020	Jan. 31, 2021
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Decrease in accumulated deficit		$ (1,335,693)		$ (1,321,679)
Decrease in additional paid-in capital		$ 1,462,038		$ 1,474,843
ASU 2019-12
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Change in Accounting Principle, Accounting Standards Update, Adopted [true false]		true
Change in Accounting Principle, Accounting Standards Update, Adoption Date		Feb. 01, 2021
Change in Accounting Principle, Accounting Standards Update, Immaterial Effect [true false]		true
ASU 2020-06
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Change in Accounting Principle, Accounting Standards Update, Adoption Date		Feb. 01, 2021
Change in Accounting Principle, Accounting Standards Update, Early Adoption [true false]		true
Decrease in accumulated deficit	$ 600
Decrease in additional paid-in capital	(68,600)
Increase of debt, net, non current	$ 68,000
Credit Concentration Risk | Accounts Receivable
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Number of major customers		one		one
Concentration risk percentage		10.00%		10.00%
Customer Concentration Risk | Revenue
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Number of major customers		No	No
Concentration risk percentage		10.00%	10.00%
Geographic Concentration Risk | Revenue | United States
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Concentration risk percentage		69.00%	73.00%
Geographic Concentration Risk | Revenue | Japan
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Concentration risk percentage		17.00%	13.00%
Geographic Concentration Risk | Property and Equipment | United States
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Concentration risk percentage		96.00%		96.00%

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Revenues - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 30, 2021	Apr. 30, 2020	Jan. 31, 2021
Revenue From Contract With Customer [Abstract]
Deferred revenue	$ 423.2		$ 465.6
Deferred revenue, revenue recognized out of beginning balance	167.4	$ 154.4
Remaining performance obligation, revenue expected to be recognized	$ 864.8
Revenue remaining performance obligation, percentage	62.00%

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Revenues - Additional Information (Details 1)	Apr. 30, 2021
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-05-01
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items]
Revenue, remaining performance obligation, expected timing of satisfaction, period	12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2022-05-01
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items]
Revenue, remaining performance obligation, expected timing of satisfaction, period	12 months

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Fair Value Measurements - Summary of Financial Assets Subject to Fair Value (Details) - Recurring - Money Market Funds - USD ($) $ in Thousands	Apr. 30, 2021	Jan. 31, 2021
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	$ 324,926	$ 256,861
Level 1
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Cash equivalents	$ 324,926	$ 256,861

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Fair Value Measurements - Additional Information (Details) - USD ($)		12 Months Ended
	Nov. 27, 2017	Jan. 31, 2021	Apr. 30, 2021
Derivative [Line Items]
Certificates of deposit			$ 50,000,000
November 2017 Facility | Secured Debt
Derivative [Line Items]
Debt instrument, principal amount	$ 350,000,000.0
November 2017 Facility | Secured Debt | Wells Fargo Bank
Derivative [Line Items]
Debt instrument maturity date	Jul. 12, 2022
November 2017 Facility | Revolving Credit Facility | Secured Debt | Wells Fargo Bank
Derivative [Line Items]
Total debt outstanding with carrying amount		$ 30,000,000.0	30,000,000.0
0.00% Convertible Notes Due 2026 | Senior Notes
Derivative [Line Items]
Debt instrument interest rate stated percentage		0.00%
Debt instrument maturity date		Jan. 15, 2026
Debt instrument, principal amount		$ 345,000,000.0
0.00% Convertible Notes Due 2026 | Senior Notes | Level 2
Derivative [Line Items]
Convertible senior notes, fair value		$ 348,400,000	$ 375,300,000

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Balance Sheet Components - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 30, 2021	Apr. 30, 2020	Jan. 31, 2021
Property Plant And Equipment [Line Items]
Allowance for doubtful accounts receivable	$ 3.0		$ 2.7
Accumulated depreciation of property and equipment acquired under finance lease	165.5		152.5
Depreciation expense	16.2	$ 16.4
Servers and related equipment
Property Plant And Equipment [Line Items]
Gross amount of property and equipment acquired under finance lease	258.6		256.0
Depreciation expense	13.1	$ 13.1
Construction in progress
Property Plant And Equipment [Line Items]
Gross amount of property and equipment acquired under finance lease	$ 5.6		$ 7.1

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Balance Sheet Components - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands		Apr. 30, 2021	Jan. 31, 2021
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract]
Prepaid expenses		$ 21,551	$ 11,672
Capitalized qualifying implementation costs incurred in a hosting arrangement that is a service contract, net of amortization	[1]	1,802	1,672
Other current assets		3,018	3,441
Total prepaid expenses and other current assets		$ 26,371	$ 16,785

[1] Capitalized stock-based compensation expense, which is included in these amounts, was not material for the periods presented. The accumulated amortization of the capitalized costs was $1.6 million and $1.4 million as of April 30, 2021 and January 31, 2021, respectively. Amortization expense related to capitalized costs was not material for the three months ended April 30, 2021 and 2020. We have not recorded any material impairment charges during the periods presented.

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Balance Sheet Components - Schedule of Prepaid Expenses and Other Current Assets (Parenthetical) (Details) - USD ($)	3 Months Ended	12 Months Ended
	Apr. 30, 2021	Jan. 31, 2021
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract]
Accumulated amortization of capitalized costs	$ 1,600,000	$ 1,400,000
Impairment charges	$ 0	$ 0

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Balance Sheet Components - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands	Apr. 30, 2021	Jan. 31, 2021
Property Plant And Equipment [Line Items]
Total property and equipment, gross	$ 478,930	$ 484,171
Less: accumulated depreciation	(332,830)	(324,023)
Total property and equipment, net	146,100	160,148
Servers and related equipment
Property Plant And Equipment [Line Items]
Total property and equipment, gross	354,999	352,224
Leasehold improvements
Property Plant And Equipment [Line Items]
Total property and equipment, gross	78,289	80,558
Computer hardware
Property Plant And Equipment [Line Items]
Total property and equipment, gross	21,689	25,810
Furniture and fixtures
Property Plant And Equipment [Line Items]
Total property and equipment, gross	13,998	14,157
Construction in progress
Property Plant And Equipment [Line Items]
Total property and equipment, gross	$ 9,955	$ 11,422

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Balance Sheet Components - Schedule of Operating Lease Right-of-Use Assets, Net (Details) - USD ($) $ in Thousands	Apr. 30, 2021	Jan. 31, 2021
Balance Sheet Related Disclosures [Abstract]
Operating lease right-of-use assets	$ 270,331	$ 270,428
Less: accumulated amortization	(86,930)	(76,175)
Operating lease right-of-use assets, net	$ 183,401	$ 194,253

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Balance Sheet Components - Schedule of Other Long-Term Assets (Details) - USD ($) $ in Thousands		Apr. 30, 2021	Jan. 31, 2021
Property Plant And Equipment [Line Items]
Acquired intangible assets, net of amortization		$ 19,781
Internally developed software costs, net of amortization	[1],[2]	16,007	$ 16,071
Other assets, noncurrent		5,390	5,247
Deposits, noncurrent		2,481	2,707
Other long-term assets		51,949	32,774
On-premises software
Property Plant And Equipment [Line Items]
Internally developed software costs, net of amortization	[1],[3]	$ 8,290	$ 8,749

[1] The accumulated amortization of capitalized software costs in the aggregate was $14.1 million and $11.2 million as of April 30, 2021 and January 31, 2021, respectively. Amortization expense related to capitalized software was $3.0 million and $1.9 million for the three months ended April 30, 2021 and 2020, respectively. We have not recorded any material impairment charges during the periods presented.

[2] Capitalized stock-based compensation expense, which is included in these amounts, was $5.9 million and $5.8 million as April 30, 2021 and January 31, 2021, respectively.

[3] The estimated useful lives of on-premises software range from three to four years.

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Balance Sheet Components - Schedule of Other Long-Term Assets (Parenthetical) (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 30, 2021	Apr. 30, 2020	Jan. 31, 2021
Property Plant And Equipment [Line Items]
Capitalized stock-based compensation expenses	$ 5.9		$ 5.8
Accumulated amortization of capitalized software costs	14.1		$ 11.2
Amortization expense related to capitalized software	$ 3.0	$ 1.9
On-premises software | Maximum
Property Plant And Equipment [Line Items]
Finite-lived intangible assets estimated useful life	4 years
On-premises software | Minimum
Property Plant And Equipment [Line Items]
Finite-lived intangible assets estimated useful life	3 years

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Leases - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 30, 2021	Jan. 31, 2021
Lessee Lease Description [Line Items]
Finance lease agreements term	4 years
Sublease expiration year	2025
Other Long-term Liabilities
Lessee Lease Description [Line Items]
Asset retirement obligation	$ 3.1	$ 3.1
Minimum
Lessee Lease Description [Line Items]
Operating lease expiration year	2022
Total lease term of sublease arrangement	11 months
Maximum
Lessee Lease Description [Line Items]
Operating lease expiration year	2029
Total lease term of sublease arrangement	96 months

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Leases - Schedule of Lease Cost Included In Operating Expenses in Condensed Consolidated Statements of Operations (Details) - USD ($) $ in Thousands		3 Months Ended
		Apr. 30, 2021	Apr. 30, 2020
Finance lease cost:
Amortization of finance lease right-of-use assets		$ 13,082	$ 13,106
Interest on finance lease liabilities		1,171	1,526
Operating lease cost, gross		13,780	13,117
Variable lease cost, gross		2,302	2,724
Sublease income		(3,194)	(2,808)
Total lease cost	[1]	$ 27,141	$ 27,665

[1] Short-term lease cost was not material for the periods presented and is not included in the table above.

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Leases - Summary of Maturities of Operating and Finance Lease Liabilities (Details) $ in Thousands	Apr. 30, 2021 USD ($)
Leases [Abstract]
Operating Leases, Remainder of 2022	$ 41,742	[1]
Operating Leases, 2023	49,593	[1]
Operating Leases, 2024	48,126	[1]
Operating Leases, 2025	32,476	[1]
Operating Leases, 2026	28,391	[1]
Operating Leases, Thereafter	63,616	[1]
Operating Leases, Total lease payments	263,944	[1]
Less: Operating Leases imputed interest	(37,715)	[1]
Operating Leases, Present value of total lease liabilities	226,229	[1]
Finance Leases, Remainder of 2022	38,898
Finance Leases, 2023	42,041
Finance Leases, 2024	19,584
Finance Leases, 2025	1,573
Finance Leases, Total lease payments	102,096
Less: Finance Leases imputed interest	(5,109)
Finance Leases, Present value of total lease liabilities	$ 96,987

[1] Non-cancellable sublease proceeds for the remainder of the fiscal year ending January 31, 2022 and the fiscal years ending January 31, 2023, 2024, and 2025 of $6.6 million, $8.8 million, $2.3 million, and $2.1 million, respectively, are not included in the table above.

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Leases - Summary of Maturities of Operating and Finance Lease Liabilities (Parenthetical) (Details) $ in Millions	Apr. 30, 2021 USD ($)
Leases [Abstract]
Non-cancellable sublease proceeds for the year ending January 31, 2022	$ 6.6
Non-cancellable sublease proceeds for the year ending January 31, 2023	8.8
Non-cancellable sublease proceeds for the year ending January 31, 2024	2.3
Non-cancellable sublease proceeds for the year ending January 31, 2025	$ 2.1

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Acquisitions - Additional Information (Details) - USD ($) $ in Thousands	Feb. 16, 2021	Feb. 08, 2021	Apr. 30, 2021	Jan. 31, 2021
Business Acquisition [Line Items]
Total purchase price allocated to goodwill			$ 75,597	$ 18,740
SignRequest
Business Acquisition [Line Items]
Total aggregate consideration		$ 54,300
Cash consideration transferred		$ 44,300
Consideration transferred, shares of common stock		550,366
Consideration transferred, common stock value		$ 10,000
Total purchase price allocated to goodwill		43,400
Total purchase price allocated to acquired developed technology		14,900
Total purchase price allocated to deferred tax liability		$ 2,500
Cloud Fast Path
Business Acquisition [Line Items]
Total aggregate consideration	$ 14,800
Cash consideration transferred	12,400
Total purchase price allocated to goodwill	13,200
Total purchase price allocated to acquired developed technology	5,800
Cash held in escrow	2,400
Total purchase price allocated to deferred revenue	$ 4,800

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Goodwill and Acquired Intangible Assets - Summary of Goodwill Activity (Details) - USD ($)	3 Months Ended
	Apr. 30, 2021	Apr. 30, 2020
Goodwill [Line Items]
Balance as of January 31, 2021	$ 18,740,000
Goodwill acquired		$ 0
Foreign currency translation	241,000
Balance as of April 30, 2021	75,597,000
SignRequest
Goodwill [Line Items]
Goodwill acquired	43,386,000
Cloud FastPath
Goodwill [Line Items]
Goodwill acquired	$ 13,230,000

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Goodwill and Acquired Intangible Assets - Additional Information (Details) - USD ($)	3 Months Ended
	Apr. 30, 2021	Apr. 30, 2020
Finite Lived Intangible Assets [Line Items]
Goodwill impairment	$ 0	$ 0
Goodwill additions		0
Cost of Revenue
Finite Lived Intangible Assets [Line Items]
Acquired intangible assets amortization	$ 900,000	$ 0

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Goodwill and Acquired Intangible Assets - Summary of Acquired Intangible Assets (Details) $ in Thousands	3 Months Ended
	Apr. 30, 2021 USD ($)
Finite Lived Intangible Assets [Line Items]
Gross Value	$ 20,682
Accumulated Amortization	901
Net Carrying Value	19,781
Developed Technology
Finite Lived Intangible Assets [Line Items]
Gross Value	20,682
Accumulated Amortization	901
Net Carrying Value	$ 19,781
Weighted-Average Remaining Useful Life (Years)	4 years 2 months 19 days

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Goodwill and Acquired Intangible Assets - Schedule of Expected Amortization Expense for Acquired Intangible Assets (Details) $ in Thousands	Apr. 30, 2021 USD ($)
Finite Lived Intangible Assets Future Amortization Expense [Abstract]
Remainder of 2022	$ 3,860
2023	4,912
2024	4,912
2025	3,064
2026	2,976
Thereafter	57
Net Carrying Value	$ 19,781

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Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 30, 2021	Jan. 31, 2021
Commitments And Contingencies [Line Items]
Purchase obligation	$ 261,995
Purchase obligation, due to be paid in 2022	7,363
Purchase obligation, due to be paid in 2023	38,104
Purchase obligation, due to be paid in 2024	$ 4,860
Minimum
Commitments And Contingencies [Line Items]
Purchase obligation term	2 years
Maximum
Commitments And Contingencies [Line Items]
Purchase obligation term	8 years
Accounts Payable Accrued Expenses and Other Current Liabilities and Other Long Term Liabilities
Commitments And Contingencies [Line Items]
Purchase obligation	$ 9,200
Purchase obligation, due to be paid in 2022	3,500
Purchase obligation, due to be paid in 2023	3,800
Purchase obligation, due to be paid in 2024	1,900
November 2017 Facility | Wells Fargo Bank | Secured Debt | Letters of Credit
Commitments And Contingencies [Line Items]
Letters of credit facility	$ 27,000	$ 27,000

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Commitments and Contingencies - Future Payments under Non-cancellable Contractual Purchases (Details) $ in Thousands	Apr. 30, 2021 USD ($)
Purchase Obligation Fiscal Year Maturity [Abstract]
Remainder of 2022	$ 7,363
2023	38,104
2024	4,860
2025	434
2026	211,234
Purchase Obligations	$ 261,995

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Debt - Additional Information (Details)		1 Months Ended	3 Months Ended
	Nov. 27, 2017 USD ($)	Jan. 31, 2021 USD ($) $ / shares shares	Apr. 30, 2021 USD ($) TradingDay $ / shares shares
Interest Rate Swap
Debt Instrument [Line Items]
Derivative, effective date			Sep. 05, 2019
Derivative, maturity period			5 years
Derivative, notional value			$ 30,000,000.0
Convertible Senior Notes | 0.00% Convertible Senior Notes Due January 15, 2026
Debt Instrument [Line Items]
Aggregate principal amount		$ 345,000,000.0	$ 345,000,000
Debt instrument interest rate stated percentage		0.00%
Debt instrument due date		Jan. 15, 2026
Principal amount of notes used in conversion rate		$ 1,000
Initial conversion rate per $1,000 principal amount of notes | shares		38.7665
Initial conversion price per share of common stock | $ / shares		$ 25.80
Debt instrument, convertible, latest date			Oct. 15, 2025
Debt instrument, effective interest rate			0.56%
Interest expense, debt			$ 500,000
Initial strike price | $ / shares			25.80
Initial cap prices | $ / shares			35.58
Common stock shares covered under capped call transactions | shares			13,400,000
Cost of purchased capped calls			$ 27,800,000
Total debt outstanding with carrying amount		$ 267,614,000	$ 336,061,000
Convertible Senior Notes | 0.00% Convertible Senior Notes Due January 15, 2026 | Debt Instrument, Redemption, Period On or After January 20, 2024
Debt Instrument [Line Items]
Debt instrument, convertible, threshold trading days | TradingDay			20
Debt instrument, convertible, threshold consecutive trading days | TradingDay			30
Debt instrument, convertible, threshold percentage of stock price trigger			130.00%
Debt instrument, redemption period, start date			Jan. 20, 2024
Debt instrument, redemption price, percentage of principal amount redeemed			100.00%
Convertible Senior Notes | 0.00% Convertible Senior Notes Due January 15, 2026 | Debt Instrument, Convertible, Terms of Conversion Feature, Circumstances One
Debt Instrument [Line Items]
Debt instrument, convertible, threshold trading days | TradingDay			20
Debt instrument, convertible, threshold consecutive trading days | TradingDay			30
Debt instrument, convertible, threshold percentage of stock price trigger			130.00%
Convertible Senior Notes | 0.00% Convertible Senior Notes Due January 15, 2026 | Debt Instrument, Convertible, Terms of Conversion Feature, Circumstances Two
Debt Instrument [Line Items]
Debt instrument, convertible, threshold consecutive trading days | TradingDay			5
Debt instrument, convertible, threshold maximum percentage of product of last reported sale price of common stock			98.00%
Secured Debt | November 2017 Facility
Debt Instrument [Line Items]
Aggregate principal amount	$ 350,000,000.0
Leverage ratio Maximum	6.00%
Secured Debt | November 2017 Facility | Wells Fargo Bank
Debt Instrument [Line Items]
Debt instrument due date	Jul. 12, 2022
Line of credit facility, finance leases and debt covenant limit	$ 200,000,000.0
Secured Debt | November 2017 Facility | Revolving Credit Facility | Wells Fargo Bank
Debt Instrument [Line Items]
Line of credit facility, termination date	Nov. 27, 2017
Line of credit facility, maximum borrowing capacity	$ 100,000,000.0
Total debt outstanding with carrying amount		$ 30,000,000.0	$ 30,000,000.0
Secured Debt | November 2017 Facility | Revolving Credit Facility | Wells Fargo Bank | Prime Rate
Debt Instrument [Line Items]
Line of credit facility, floating interest rate			0.25%
Secured Debt | November 2017 Facility | Revolving Credit Facility | Wells Fargo Bank | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Line of credit facility, floating interest rate			1.00%
Secured Debt | November 2017 Facility | Letters of Credit | Wells Fargo Bank
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity sublimit	$ 45,000,000.0

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Debt - Schedule of Net Carrying Amounts of Liability Component of Notes (Details) - 0.00% Convertible Senior Notes Due January 15, 2026 - Convertible Senior Notes - USD ($)	Apr. 30, 2021	Jan. 31, 2021
Debt Instrument [Line Items]
Principal	$ 345,000,000	$ 345,000,000.0
Unamortized debt discount for conversion option		(69,916,000)
Unamortized issuance costs	(8,939,000)	(7,470,000)
Net carrying amount	$ 336,061,000	$ 267,614,000

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Stock-Based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Apr. 30, 2021	Apr. 30, 2020	Jan. 31, 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Aggregate intrinsic value of exercised options	$ 2,500	$ 2,200
Aggregate estimated fair value of stock options granted to employees vested	$ 400	$ 500
Shares Subject to Options Outstanding, Options granted	0
Weighted-average grant date fair value of options granted to employees		$ 5.41
Unrecognized stock-based compensation expense related to stock option	$ 1,200
Remaining weighted-average period	1 year 4 months 17 days
Stock options outstanding	6,441,577		6,617,037
Share-based compensation expense	$ 41,790	$ 40,043
Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Remaining weighted-average period	2 years 11 months 23 days
Unrecognized stock-based compensation expense	$ 339,300
Performance-Based Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized stock-based compensation expense related to stock option	$ 700
Remaining weighted-average period	1 year 8 months 1 day
2015 Equity Incentive Plan | Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period	4 years
2015 Equity Incentive Plan | Performance-Based Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options outstanding	1,375,000
2015 Equity Incentive Plan | Class A Common Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares common stock reserved for issuance	26,683,430
2015 Employee Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of eligible compensation allowed to employees to purchase shares at a discount	15.00%
Description of offering period excluding initial offering period	The 2015 ESPP provides for 24-month offering periods beginning March 16 and September 16 of each year, and each offering period consists of four six-month purchase periods.
Purchase price of common stock, percentage	85.00%
Description of offering period resets	the offering period resets and the new lower price becomes the new offering price for a new 24 month offering period.
Unrecognized stock-based compensation expense	$ 25,400
Dividend yield	0.00%	0.00%
2015 Employee Stock Purchase Plan | Class A Common Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares common stock reserved for issuance	1,356,993
Fiscal 2021 Executive Bonus Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation expense	$ 3,200
Fiscal 2022 Executive Bonus Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized stock-based compensation expense	9,000
Share-based compensation expense	$ 2,600
Equity incentive compensation description	The Fiscal 2022 Executive Bonus Plan provides opportunities for 100% equity incentive compensation payouts based on our actual achievement of pre-established corporate financial objectives, subject to review and a final approval by our Compensation Committee.
Fiscal 2022 Executive Bonus Plan | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Remaining weighted-average period	1 year
Per Month after One Year of Vesting Commencement Date | 2015 Equity Incentive Plan | Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting percentage	6.25%
Per Quarter after One Year Of Vesting Commencement Date | 2015 Equity Incentive Plan | Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting percentage	6.25%
One Year from Vesting Commencement Date | 2015 Equity Incentive Plan | Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting percentage	25.00%

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Stock-Based Compensation - Summary of Stock Option Activity Under Equity Incentive Plans and Related Information (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Apr. 30, 2021	Jan. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Shares Subject to Options Outstanding, Beginning balance	6,617,037
Shares Subject to Options Outstanding, Options granted	0
Shares Subject to Options Outstanding, Options exercised	(175,460)
Shares Subject to Options Outstanding, Ending balance	6,441,577	6,617,037
Shares Subject to Options Outstanding, Vested and expected to vest	6,381,107
Shares Subject to Options Outstanding, Exercisable	5,224,876
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Weighted-Average Exercise Price, Beginning Balance	$ 10.77
Weighted-Average Exercise Price, Options exercised	7.73
Weighted-Average Exercise Price, Ending Balance	10.85	$ 10.77
Weighted-Average Exercise Price, Vested and expected to vest	10.76
Weighted-Average Exercise Price, Exercisable	$ 8.71
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Weighted-Average Remaining Contractual Life (Years)	3 years 6 months 18 days	3 years 9 months 7 days
Weighted-Average Remaining Contractual Life (Years), Vested and expected to vest	3 years 6 months 7 days
Weighted-Average Remaining Contractual Life (Years), Exercisable	2 years 7 months 28 days
Aggregate Intrinsic Value, Balance	$ 67,482	$ 48,098
Aggregate Intrinsic Value, Vested and expected to vest	67,406
Aggregate Intrinsic Value, Exercisable	$ 65,940

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Stock-Based Compensation - Summary of Restricted Stock Unit and Awards Activity Under Equity Incentive Plans and Related Information (Details) - Restricted Stock Units	3 Months Ended
	Apr. 30, 2021 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Number of Restricted Stock Units/Awards Outstanding, Unvested Beginning Balance | shares	14,330,678
Number of Restricted Stock Units/Awards Outstanding, Granted | shares	7,003,448
Number of Restricted Stock Units, Vested, net of shares withheld for employee payroll taxes | shares	(1,206,102)
Number of Restricted Stock Units/Awards Outstanding, Forfeited/cancelled, including shares withheld for employee payroll taxes | shares	(1,915,467)
Number of Restricted Stock Units/Awards Outstanding Unvested Ending Balance | shares	18,212,557
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted-Average Grant Date Fair Value, Unvested Beginning Balance | $ / shares	$ 17.68
Weighted-Average Grant Date Fair Value, Granted | $ / shares	23.65
Weighted -Average Grant Date Fair Value, Vested, net of shares withheld for employee payroll taxes | $ / shares	19.75
Weighted-Average Grant Date Fair Value, Forfeited/cancelled, including shares withheld for employee payroll taxes | $ / shares	18.46
Weighted-Average Grant Date Fair Value, Unvested Ending Balance | $ / shares	$ 19.75

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Stock-Based Compensation - Summary of Components of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 30, 2021	Apr. 30, 2020
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 41,790	$ 40,043
Cost of Revenue
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	5,340	4,541
Research and Development
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	15,453	17,287
Sales and Marketing
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	11,551	10,079
General and Administrative
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 9,446	$ 8,136

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Stock-Based Compensation - Summary of Estimated Fair Value of Employee Stock Options and 2015 ESPP (Details)	3 Months Ended
	Apr. 30, 2021	Apr. 30, 2020
2015 Employee Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Dividend yield	0.00%	0.00%
Risk-free interest rate, Minimum	0.10%	0.30%
Risk-free interest rate, Maximum	0.20%	0.40%
Volatility, Minimum	42.00%	44.00%
Volatility, Maximum	52.00%	52.00%
2015 Employee Stock Purchase Plan | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected term (in years)	6 months	6 months
2015 Employee Stock Purchase Plan | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected term (in years)	2 years	2 years
Employee Stock Option
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected term (in years)		5 years 9 months 18 days
Risk-free interest rate		0.60%
Volatility		46.00%
Dividend yield		0.00%

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Net Loss per Share - Summary of Computation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Apr. 30, 2021	Apr. 30, 2020
Numerator:
Net loss	$ (14,573)	$ (25,550)
Denominator:
Weighted-average shares used to compute net loss per share, basic and diluted	161,733	151,943
Net loss per share, basic and diluted	$ (0.09)	$ (0.17)

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Net Loss per Share - Summary of Weighted Average Outstanding Shares Excluded from Computation of Diluted Net Loss per Share (Details) - shares shares in Thousands	3 Months Ended
	Apr. 30, 2021	Apr. 30, 2020
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	23,184	25,165
Employee stock purchase plan
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	1,743	2,678
Options to purchase common stock
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	5,369	5,624
Restricted Stock Units
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	15,471	16,863
Shares related to the convertible senior notes
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	601

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Segments - Additional Information (Details)	3 Months Ended
	Apr. 30, 2021 Segment
Segment Reporting [Abstract]
Number of operating segments	1

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Subsequent Events - Additional Information (Details) - USD ($)	Jun. 02, 2021	May 12, 2021	Apr. 07, 2021
Subsequent Event | Tender Offer
Subsequent Event [Line Items]
Expiration date	Jun. 29, 2021
Class A Common Stock | Subsequent Event | Tender Offer
Subsequent Event [Line Items]
Authorized purchase amount	$ 500,000,000
Class A Common Stock | Subsequent Event | Tender Offer | Minimum
Subsequent Event [Line Items]
Purchase price per share	$ 22.75
Class A Common Stock | Subsequent Event | Tender Offer | Maximum
Subsequent Event [Line Items]
Purchase price per share	$ 25.75
KKR | Series A Convertible Preferred Stock
Subsequent Event [Line Items]
Issuance and sale, number of shares			500,000
Shares issued, par value			$ 0.0001
Aggregate purchase price			$ 500,000,000
Sale price per share			$ 1,000
KKR | Series A Convertible Preferred Stock | Subsequent Event
Subsequent Event [Line Items]
Sale of stock closing date		May 12, 2021