Good afternoon. My name is Josh, and I will be your conference operator today. At this time, I would like to welcome everyone to Box Inc.'s First Quarter Fiscal 2020 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Alice Lopatto, Head of Investor Relations, you may begin.

Good afternoon, and welcome to Box's first quarter fiscal 2020 earnings conference call. On the call today, we have Aaron Levie, our CEO; and Dylan Smith, our CFO. Following our prepared remarks, we will take questions. Today's call is being webcast and will also be available for replay on our Investor Relations website at www.box.com/investor. Our webcast will be audio only. However, supplemental slides are now available for download on our website. We will also post the highlights of today's call on Twitter at the handle @boxincir. On this call, we will be making forward-looking statements, including our Q2 and FY2020 financial guidance and our expectations regarding our financial performance, for fiscal 2020 and future periods, timing of and market adoption of our products, our markets and market size, our operating leverage, our expectations regarding maintaining positive free cash flow, future profitability and unrecognized revenues and remaining performance obligation, our planned investments and growth strategies, our ability to achieve our long-term revenue and other operating model targets and expected timing and benefits from our new products and partnerships. These statements reflect our best judgments based on factors currently known to us and actual events or results may differ materially. Please refer to the press release and the risk factors in documents we filed with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K for information on risks and uncertainties that may cause actual results to differ materially. These forward-looking statements are being made as of today, June 3, 2019 and we disclaim any obligation to update or revise them should they change or cease to be up-to-date. In addition, during today's call, we will discuss non-GAAP financial measures. These non-GAAP financial measures should be considered, in addition to, not as a substitute for or in isolation from our GAAP results. You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results in our earnings press release and in the related PowerPoint presentation, which can be found on the Investor Relations page of our website. Unless otherwise indicated, all references to financial measures are on a non-GAAP basis. With that, let me hand it over to Aaron.

Thanks, Alice, and thanks, everyone, for joining the call today. Before we talk about Q1 results, we want to take the time today to give you some additional insight in how our business has been evolving and how we are seeing our strategy play out in our results this year. Enterprises need a cloud content management platform that powers business process automation, secure collaboration across best-of-breed apps and easy custom development for creating new digital experiences and replacing legacy enterprise content management systems. To address this demand, we've been evolving our product to extend our cloud content management capabilities. Simultaneously, we have been advancing our go-to-market strategy to focus more on customer-oriented solution selling. Together, these two initiatives are aimed at transitioning our customers to leveraging Box as a complete platform for secure content management in workflow and collaboration. When our customers use the full suite of our cloud content management solutions, we see dramatically higher average contract value and better retention, leading to greater lifetime value for Box. The key indicator of our success in driving this transition is the adoption of our add-on products, which is why we focus on the attach rates and the growth of products like Box Governance, platform and Relay and in the future Box Shield. We're seeing tremendous success from our add-on products, and in the past quarter our add-on product revenue grew by 57% year-over-year. The demand for Box remains strong and continues to grow. While our larger more complex deployments do tend to have longer deal cycles, we believe that our go-to-market initiatives in combination with our expanded product portfolio will enable us to improve sales productivity and meet the growing demand for cloud content management. Even as our strategy remains focused on driving long-term revenue growth, we will increasingly look…

Thanks, Aaron. Good afternoon, everyone, and thank you for joining us today. Q1 was a solid start to the year as we closed a record percentage of large deals with add-on products while delivering continued leverage in our bottom-line results including strong improvement in operating margin and free cash flow generation. While we still have work to do, we are seeing good traction in our solution-selling initiatives and we are very focused on improving our sales efficiency and overall growth rate over time. We delivered revenue of $163.0 million in Q1, up 16% year-over-year. 24% of this revenue came from regions outside of the United States. And in Q1 we saw continued strength in Japan and improvement in certain regions in EMEA. A year ago we adopted the ASC 606 accounting standard and as part of our adoption, we have begun disclosing our remaining performance obligations or RPO which represent non-cancelable contracts that we expect to recognize as revenue in future periods. RPO consists of deferred revenue and backlog offset by contract assets. Moving forward we'll be emphasizing our RPO which we believe is a more comprehensive indicator of our momentum and growth potential than billings and is consistent with GAAP accounting. Our RPO ended Q1 at $637 million up 16% year-over-year. We expect to recognize roughly 66% of this RPO over the next 12 months. First quarter billings came in at $118.4 million representing 1% calculated and 4% adjusted billings growth year-over-year in line with expectations we referenced in our last earnings call. As we discussed on that call, our Q1 billings faced a very difficult year-over-year comparison including an unusually high volume of multi-year prepays and billings for the nonrecurring enhanced developer fee in the year-ago period as well as a reduction from a single large customer that…

[Operator Instructions] And your first question comes from Ittai Kidron with Oppenheimer. Your line is open.

Thanks. First of all, congratulations to you, Aaron on your -- the recent addition to your family.

Thank you.

Maybe we can dive into the crux of what's going on. I guess, in a way you're kind of shifting to going deep rather going -- rather than going wide with customers. Help us think about as you look at this past quarter, you certainly have some expectations heading into the quarter. What has kind of worked to your expectations in the quarter and what has not? And this elongation of sales cycles given the complexity of the deal, how much of that is you still selling the solutions siloed? Is the bundle approach already in effect and is it impacting the sales cycle? Or is that going to help or not? Is that ahead of us or behind us? Help us -- help me understand that.

Yes. So I think Q2 was certainly a great example of our add-on products overall contributing heavily to our big deals especially if you look at kind of the $1 million and $500,000-plus categories. And this is -- before we even had the bundles and the product suites that you just mentioned. So what we are seeing is that more and more of our strategic customers that are spending more than $100,000 with us are using multiple one or more add-on products like Box Governance, Box Platform and that is enriching their use cases. It is obviously and dramatically expanding their average contract value. It's improving their customer retention. And so our introduction of product suites, which goes live this month in June, is meant to accelerate and streamline the adoption of those add-on products. So we have two suites that are going to be coming live in market. One is a digital workplace suite, which includes Box Governance, as well as the core product. And then we have the digital business suite, which includes Box Platform and Box Relay. And customers now on a single-line item are going to be able to buy those multiple products all together and we think that's going to dramatically streamline how customers are driving this add-on products. We’re seeing pretty significant amount of demand already internally from our sales force, which we think is representative of the demand that we’re seeing outside from customers for those suites. So we're very excited about what that momentum looks like. And I think as you think about the commentary on this call, we are seeing that as you do these much bigger deals that does lengthen the sales cycles. Although at the end of that results is much larger deals, much bigger customer’s, way greater retention, and that's obviously a really good thing for the business. So this is going to -- this is a mixed shift that's playing out in the business, but we see there's a tremendous amount of upside as a result of that.

Very good. Help me think about the suites. I guess, when you think about the guidance for the year, I mean is there an assumption that the suites help accelerate transactions? Or that assumption is still not worked into your expectations? And also help me think about the price discount that's implied in the suite approach?

Yeah. So to the extent possible the suites are, obviously, baked into our guidance although because they don't exist yet, we only have a certain amount that we've been able to simulate. But because they launch in the first half of the year in our Q2, it won't have any impact really on our first half results. And so that's tied to our guidance, and we do think that they'll become a big contributor to the growth especially at the tail end of this year. So -- but there does remains an upside on that, but we want to wait for that to play out a bit more. But again we’re seeing a lot of really good demand within the sales force internally and then generating some of that demand directly from customers as well as we've been starting message the suites to customers. In terms of discounting, there's a marginal discount when you are on per product basis when you buy the suite of all of our solutions. However, the -- we expect the average price per seat to actually be positive as a result of customers buying these suites. So we would actually expect on a like-for-like basis that the price per seat for customers that purchase these suites will be much higher when a customer buys the suite. So you'll get a discount on a per product basis versus list price of those products but the customer will be paying more per user within their organization as a result of buying into one of our product suites.

Got it. And just to clarify, when someone – would customer still be able to buy the product siloed? Or suite is the only way for them to buy products going forward?

For now they can still buy the product siloed. We do know plenty of cases where a customer might want a very specific add-on, especially something like Box Platform, although we do expect that this will continue to help improve and involve our sales motion. We'd like to be showing up to customers with a full range of solutions in our sales motion as opposed to a much more piecemeal approach in the sales process. And so the ability to be able to sell the full suite of capabilities all at once to customers and ensure that they can get the full value of Box, we think it's going to be really impactful to sales productivity. And again the demand that we’re seeing internally from our sales force, I think is quite indicative of how important this is going to be to our sales motion overall.

Very good. Good luck.

Thank you.

Your next question comes from Phil Winslow with Wells Fargo. Your line is open.

Hi, guys. Thank you very much for taking my question. Just wanted to focus on a couple of items. First you made a commentary about you growing the sales force this year, mid-single-digit. And then the next one you talked about next year, 6% to 7% operating margin. And beyond that you are going to get 30% op margin post revenue growth. I guess, if you think coming through the progression there kind of walk me through the process of why you lowered the sales force head count for this year, and then I guess kind of extrapolate that through, how you think of your comment to that accelerating growth even next year and beyond, kind of just walk me through the thought process and I guess the path there?

Sure. So this is Dylan. As a reminder and as we said on the call, we grew our sales force last year by about 12% with a focus in terms of expanding our sales force in the fields. Many of those reps are still ramping through this period and will be throughout the year. And then we have initially targeted growth in the 10% to 15% range, which [indiscernible] through that mid-single-digit range. And really the focus there is on driving more in terms of sales productivity and really doubling down on a lot of the efforts there. As we mention we've been very focused on only increasing hiring and really focusing in the regions where we have seen strong productivity trends and improvements. And so depending on how especially some of these new products play out and some of the leadership changes that we made in certain key regions around the world as we start to see pipeline generation and sales kick into gear, we would modify the hiring plans accordingly. But at this stage, we think that growth rates based on some of the trends that we’re seeing in the various sales regions that we have is the right kind of balance of growth and profitability, and allows us to generate pretty significant leverage in that line item over time as well.

Got it. Okay. Thanks guys. And then in terms of just the changes you're making to the go-to-market, obviously, you talked about some of the personnel changes there. Anything in terms of a process that's changing now call it the quarter end of the fiscal year that you highlighted and how you think about sort of that playing out over the course of this year into next year?

Yes. So, we've been making a bunch of changes around just the overall operational rigors, especially, with our big deals. While that didn't yet show up in the $100,000 result, obviously, we saw a healthy improvement in the $500,000, $1 million results in Q1 and we actually are seeing a pretty significant pipeline of the $100,000-plus deals overall, especially, in Q2 and beyond. So, we're feeling pretty good about a lot of the operational rigor that has been put into place. Additional -- additionally, I would say that there's been pretty significant improvement in sales training and in the enablement function around solution selling. So, again, this ability to take our horizontal platform and the capabilities around that platform and ensure that it is aligned to our customers' biggest pain points which is obviously what solution telling us all about. And I think as a result of that you're seeing actually more and more wins and take outs against legacy enterprise content management players. So, especially, in Q1, we saw an increase in being able to go and take out products like SharePoint, Documentum, and other legacy ECM systems. So, as we move upmarket what that's going to result in is obviously much larger deals, but being able to drive these much more strategic transactions for our customers. So, that's really what the sales operations efforts have been all about and I think we're seeing some really good signs early on in the year that is playing out in a very fruitful way.

And just to build on that and kind of circle back to the question you had about the growth rate Phil is why we remain confident in targeting in our ability to improve our revenue growth rate even with this sales hiring plan is that the foundational components are all there. So, we've talked through the sales leadership up level that we've seen in key regions. And we do have, with our current planned hiring, sufficient sales capacity as well as pipeline coverage this year to deliver against those growth targets and to make that happen. So, as mentioned that combined with a solid cloud content management traction that we've been seeing that it is better growth rate in overall economics, those are some the key drivers that lead us to that level of confidence.

Got it. Thanks guys.

Your next question comes from Melissa Franchi with Morgan Stanley. Your line is open.

Great. Thanks for taking my questions. Aaron when we spoke last quarter you talked about elongating sales cycles and some deals that had slipped from Q4. Coming into Q1, did the sales cycle elongate further than what you saw last quarter? And if so, what gives you confidence that it's simply because you're doing more strategic selling versus maybe something more fundamental or execution driven?

Yes. So, overall, I think we're seeing a really strong pipeline buildup throughout the year with pretty clear kind of close dates in a very measurable way across the business. So, I don't know that we are seeing an increase in the sale cycle length from where we were three months ago. I think we're just getting a better sense for it overall though as it relates to the financial model this year. And then of course things are ultimately tilting a little bit more back-end-oriented just given the deal sizes that they we were working, aligning the customers' budget in the second half of the year. So, overall, we do feel pretty confident in the predictability of these bigger deals. But it has overall -- the sales cycles have lengthened from maybe where we were one or two years ago and that's been the shifts in the model that we're seeing.

Got it. And then Dylan thank you for the operating margin target in FY 2021. I know that you're not going to guide for the topline likely in that period, but I'm just curious how sensitive is that guidance to the topline such that if you are seeing better growth opportunities, is there a potential that you might want to kind of more reinvest in the business and deprioritize that leverage targets?

Yes. So, as we said in the past, we do think about certainly one of the components of our overall expenses that is mapped pretty closely to the success we are seeing and sort of the topline drivers as well as outcomes is our AE hiring, our salesforce hiring. But based on the things that we're putting in place this year to drive additional efficiencies, we feel good about that operating margin target depending -- even with various kind of topline scenarios. Also although the ultimate hiring goals with the salesforce may move up or down depending on that success and productivity we're seeing and how well some of those initiatives are working, there are bunch of other things that are driving efficiencies in the business that lead us to be confident in that operating margin target even with the range of topline outcomes. And that's everything from things like beginning to see those gross margins improve as we move through next year and as we complete the data center migration to continuing to drive natural business model leverage as we expect more of our customers are going to be -- you have a larger renewal base and expansion base relative to this year which are inherently more efficient sales, not to mention the sales productivity and beginning to move more of our future hiring in lower cost locations. So, there are a number of things that we're doing across the business to drive efficiencies and I think we're going to achieve those goals even if the topline growth plays out as we're targeting.

Understood. Thank you very much.

Your next question comes from Rob Owens with KeyBanc Capital Markets. Your line is open.

Great. Thanks for taking my question. I guess if we focus on the velocity base sales and understand the economics of going up-market. But has there been a change either in market dynamics and competitive dynamic and just market maturation that would bifurcate the market and suggest Box moves up-market? Help me understand kind of the corollary in the other side of this just what's happening in that velocity base business? And they’re becoming more fungible or something of that nature? Thanks.

Yes. So actually I think we're still seeing really strong results in the velocity business. It's a really strong run rate business overall. And in fact, we're even starting to see higher average contract values within that segment with the addition of our add-on products. So on a pretty regular basis, we're seeing now record kind of breaking deal sizes within our SMB and commercial segments, which really is evidenced that if you're a smaller investment banker or you're a law firm or a you're a professional services organization or marketing agency, you have the same level of security and governance and workflow needs as a large enterprise. And we might be even more complete solution for your entire enterprise. So that allows us to actually capture in some cases a higher price perceived in those organizations. So I think we're very well positioned from a competitive standpoint in that kind of velocity business in the commercial segment. Of course, we want to layer on the enterprise business on top of that because of the strategic nature of Fortune 500 logos, and of course, the IT budgets that are out there and obviously the disruption that we can go drive within to legacy ECM space, but it is a balanced portfolio of our revenue mix everything from self-serve happening completely online with no touch all the way up to the world's largest enterprises. So I think we're going to continue to see that balance mix of revenue and drive on growth in those key segments.

Aaron, can cloud is nothing new and nor is enterprise cloud content management. Are you surprised that just this point in the lifecycle of the company's ACV sales cycles is extending. I would think that they’d be somewhat coming down just because people understand the value proposition and understand what Box can add on top of that?

Yes, it's a really good question. We spent a lot of time thinking about this internally strategically. I think what's happening is if you look at the kind of first maybe decade plus of our growth it was really Box as a tool for secure file sharing and collaboration. It was very easy to adapt just by an IT department or some other department within the organization. As we built out things like Box Governance, Box Relay obviously for workflow, Box Platform for developers to build applications on top of the platform, this has involved a broader set of constituents in the organization, which is fortunately driving more standardization around Box within an enterprise. But it comes certainly with some increased rigor on behalf of the customer and the stakeholders that have to be involved in the sales transaction. So I think what's occurring is it's less about cloud as they kind of macro technology architecture and much more about Box as a platform for content management and security compliance, governance, developer buy in that goes on into one of the sales, especially if you think about a very large regulated bank or pharmaceutical company or government agency. So the good news is operationally internally, we're very prepared for those types of deal cycles. But what it is having the impact on is extending those deal cycles. I think what we're certainly working on as well is driving again an ongoing very healthy run rate business of those kind of $100,000 plus deals that maybe won't be as susceptible to those cycle increases and really trying to drive a balanced mix of that. But overall, I think as you see this mixed shift of revenue move more toward add-on products and customers buying the full suite of our capabilities that will become pretty normalized in terms of how you see the business grow.

Thank you.

Your next question comes from Brian Peterson with Raymond James. Your line is open.

Hi, guys. Kevin here on for Brian. Thanks for taking my call. In regards to the new Relay offering, can you talk about how you see positioning that product with paid and free version? And I guess how do you see the driving customer economics versus some of your other product launches?

Yes. So really it's going to be a fundamental to our continued evolution as a cloud content management platform. In the history of the company customers had to purchase other add-on separate products from other vendors to be able to drive workflow around their content within Box. And in many cases, we see a huge opportunity to make that a much simpler experience and one that is much more streamlined and much more kind of intuitive for our customers. So we've seen a significant amount of demand for Relay the natively built product that we did just announced and will become generally available in June. So a pretty significant healthy pipeline is building, and this is again going to increase the retention rate of customers that's going to drive much stickier use cases within customers. And then overall, especially when bundled in with our add-on product suites drive up average contract value. As Dylan mentioned, we are seeing a 4x greater average contract value of customers that have one or more add-on products from Box, which is obviously a pretty material difference in what customers are spending and buying from us when they do have these add-on products and we think Relay is going to be a significant contributor to that overall mix.

That's helpful. And then maybe just a point of clarification. I think your updated full year billings outlook would imply a growth rate that's below your updated revenue outlook. So I just wanted to come back to your comment about what's giving you confidence in the pipeline that growth for the business will reaccelerate going into fiscal 2021?

Yes. So, you're right, in terms of the overall map, as we do expect billings growth and revenue growth to track more or less in line in the back half of the year. But due to some of, not just the kind of deal cycle length and time dynamics, but also some of the kind of one-time or the kind of items that have impacted billings in the first half of the year, that's what's causing that -- those kind of headwinds. Which is why we'd also point to -- and I think we'll increasingly be pointing to RPO as a pretty good indicator of the underlying momentum in the business. But, overall, as we think about the confidence, as we think about the year as a whole, which will show up to a certain extent in the billings growth, it does relate to a lot of the same things that we've started to talk about in the past. And on this call, specifically around everything from the traction that we're seeing in our cloud content management use cases and the economics and growth associated with, not just the specific add-on products, but the customers who are using those more broadly, now making up about 50% of our revenue and growing pretty steadily. So those trends continue and we believe they will, especially as our product offering exhibit -- become a lot more compelling. We think with the introduction of Relay and Suites in the near term and then Shield later in the year, combined with a lot of the inputs and then the things we look at around sales capacity and pipeline coverage and things like that, are a lot of the underlying components that lead us to be feeling good about the year as a whole.

It's very helpful. Thanks guys.

Your next question comes from Mark Murphy with JPMorgan. Your line is open.

Hi, good afternoon. This is Matt Coss on behalf of Mark Murphy. You mentioned, you saw some improvement in certain regions in EMEA. What were the regions that did improve? And what was the improvement that you are able to observe? And then, in the regions that are still transitioning, what do you expect to see from those as the year progresses?

Sure. So the most notable reason where we saw a big improvement over prior quarters is in the U.K. and Ireland, which is our largest region of EMEA, having a very strong outcome and better than planned. And that was where we closed one of our $1 million deals in the quarter as well. So that would be probably the main highlight that I'd call out in terms of materiality. Still seeing, kind of, a lower contribution from some of the areas where we've been rebuilding the team and upholding leadership like Germany, for example, has not been contributing materially to the business and we've been building out the sales capacity and some of the pipeline there. And hopefully see that start to contribute more materially, as we move through the year. But those are probably the two reasons I'd call out, in terms of both positive and still building.

Okay. And sorry if I missed this, did you mention the number of registered and paying users?

We did. We have now in terms of total registered users, just shy of 66 million, so 65.9 million. And in terms of overall paying seats 12.2 million.

Thank you.

Your next question comes from Chad Bennett with Craig-Hallum. Your line is open.

Great. Thanks for taking my questions. I guess, the large deals that slipped from last quarter, did we recoup any of those deals in a large deal metrics that you cited?

Yes. We did close a few of those within the quarter and a majority are still in the pipeline throughout this year. So still in, kind of, control of all those deals.

Okay. And then, on a net new basis, do you think -- and I guess even more broadly, the net new customer wins, do you believe you've lost share over the last 12 to 18 months in the next generation cloud content management space?

Yes. Sorry, one more time? Sorry?

Do you believe you've -- either your win rates on a net new basis have went down.

Sorry.

Or overall you've lost share in your space?

No. No. I would actually say the -- from a cloud content management standpoint, we are still in pretty clear leading position as the only cloud-native platform that customers can move to. So when we look at most of our competition, it's primarily legacy ECM vendors like OpenText or Documentum ,or products that are having to be positioned through a kind of on-prem to cloud transition like SharePoint. And overall, what we're seeing from customers is that, the functionality, the user experience, the lack of internal or external collaboration, the lack of developer experiences, or integration with other best-of-breed tools, all of those kind of deficits are causing customers to really rethink their content management environment, which is actually driving a lot of demand for Box overall.

Yes. And as it relates to the win rate, specifically, we have seen stability in many cases, especially, per add-on deals actually slight improvements in the win rates over the past several quarters. And so, absent -- and you can leave out that in a couple of ways. There's kind of what amount of the pipeline do we ultimately close, as new bookings relative to what's entering the quarter? And then what percentage of the pipeline is ultimately closed, either when and what comes in, in the latter categories how we typically think about and describe win rates. And that, as I mentioned has been slightly improving and is significantly better in deals that had at least one of our add-on products attached, as it relates to what we close out of the entering pipeline coverage that is similarly been pretty stable and strong as well, absent Q4 where we had a higher volume as we've discussed of large deals pushing out of the quarter that led that metric to go down.

Okay. One last one real quick, if I may. I think it should be straightforward. So, if you are moving up in terms of enterprise selling in Q from a sales standpoint and then also bundling in more suite-based selling or solution selling and you're going to see the benefits of this in the second half, we should expect net expansion and retention rates to accelerate?

Well, I'll tell you a couple of things there is we would expect seeing one of the things that has been contributing positively the net expansion rate is -- and that retention rate is the cross sells of add-on products which is offset some of the kind of counter pressures of things like the customer base maturing and such. However, this year as we talked about, we are going to see some pressure because of that one customer who reduced its use cases and footprint with us in the fourth -- first quarter. So that's going to show up and we'll call out the impact as we move through the year. So, I think ultimately we could see and think that we based on the product portfolio that we increasingly have, especially as we think about toward the end of the year and heading into next year some upside metric. But because of the offsetting pressure from that one large event about $8 million, that's going to make it pretty challenging compared to this year.

Great. Thanks for taking my questions.

Your next question comes from Michael Turrin with Deutsche Bank. Your line is open.

Hey, good afternoon and thanks. Just one for me. You mentioned some of the revenue headwinds heading into this year on the Q4 call. But revenue sequentially down is not something we're used to seeing giving you have a 97% recurring revenue model. You also saw an uptick in $1 million deals during the quarter. So, was hoping we could talk more around given what appears to be a conservative backdrop and some of those incremental deals showing up in some form, what are some of the offsets that are bringing the full year guide lower today versus what you are seeing last quarter when you set that initial guide?

Sure. So, let's say, first, specifically, as it relates to sequential revenue outcome, a couple of things just to keep in mind or maybe three things. First of all, the sequential increase or decrease or change is a function of the bookings that we closed in Q4 whereas as mentioned that outcome was certainly worse than our expectations and our typical Q4 performance. We also had at the very beginning of this quarter that customer downgrade which had a couple of million dollar headwind. And then finally just from purely optically there's five -- sorry -- three fewer days in Q1 versus Q4 which leads to roughly $5 million headwind, so that sort of the sequential setup there. And as it relates to the overall kind of guidance and what has changed, a couple of things and we've probably said this, but just sort of clarify we did get off to a bit of a slower start in Q1 than we would have hoped as billings landed at the low end of the range we'd expected due to the $100,000 plus deal counts coming in a bit below our expectations. And we had seen a bit more pronounced lengthening of those larger deal cycles versus what we'd expected a few months ago are really the two main things that what's changed over the past few months.

Okay. Helpful summary, Dylan. Appreciate the color there. Thanks.

And your next question comes from Erik Suppiger with JMP Securities. Your line is open.

Yeah. Thanks for taking the question. Just on the sales organization, has there been any change in terms of sales turnover? And then secondly, can you give us a sense for the tenure of your average sales people, how much of your sales organization has been with the company for a year or more?

Yeah. So, we haven't seen a significant change in terms of sales force turnover. So, as mentioned, especially now as we have a much better sense of what it takes to be successful selling these more strategic solutions sales, we have increased our focus on performance management which has a bit of an impact, but not material as it relates to the overall number. And then as it relates to the overall dynamic in terms of tenure is, what I'd say is entering this year we had about two-thirds of our field sellers fully ramped entering the year, which is both about the same as last year and also roughly correlates to how many folks have been around for a year as that's about how long it takes to achieve fully ramped quotas. So that's two-thirds of our sales force heading into the year is in that category.

All right. Very good. Thank you.

There are no further questions at this time. Thank you very much for joining us for the call today. You may now disconnect.