And as a platform that houses a significant portion of their most important data, you can imagine the customers are coming to us quite excitedly trying to work out what are the different use cases that they can be solving with Box AI.
Jason Ader: Thank you.
Aaron Levie: Yes, thanks.
Operator: Your next question comes from the line of Pinjalim Bora with JPMorgan. Your line is open.
Pinjalim Bora: Oh, great. Thanks for taking the question. Aaron, I wanted to ask on the macro headwind that you’re seeing. In your conversations, do you feel like it is part of kind of a reassessment of budgets by companies to fund their own AI projects? Is that coming up in conversations at all?
Aaron Levie: We haven’t seen that impact kind of any of the near medium-term deals that we look at in the pipeline only because we tend to have very direct use cases that a customer is expanding for and sort of the — sort of maybe general AI budget would be maybe a bit orthogonal to that. I could see that showing up maybe against somebody’s infrastructure budget or maybe some of their platform services they use. But for the content management collaboration workflow dollars that we tend to be getting, I haven’t seen that happen. That’s not to say it’s impossible, but that has not shown up to me.
Pinjalim Bora: So you don’t think there’s a portion that’s going to, I don’t know, Microsoft CoPilot that is not going to Box at this point or something like that?
Aaron Levie: Oh, sorry, if it’s more directly in that sense than I would say definitely not just because those products are simply too new and also still orthogonal in terms of the use cases that we’re solving. So we just announced as an example of our integration with CoPilot. So I think you’ll see a lot of strong interoperability there. Our customer conversations on this subject are very much focused on how can they be leveraging Box AI either through the end user interface or is the platform component to help customers with their business processes in a range of industries. So I don’t think we’re sort of competing for budget in those other domains right now.
Pinjalim Bora: Got it. And Dylan, one question on the reduction in the constant currency growth rate from, I think, 10% to 8%. How much of that 2 point delta do you say is driven by professional services?
Dylan Smith: It’s a minority able to size it. It’s kind of more than $1 million, but the bulk of it is on the recurring side.
Pinjalim Bora: Got it. Thank you.
Operator: Your next question comes from the line of Ittai Kidron with Oppenheimer. Your line is open.
George Iwanyc: Hi, it’s George Iwanyc. Maybe, Aaron, digging into the competitive environment, can you give us a sense of — are you seeing some positive gains from a consolidation standpoint and then on a pricing standpoint for a like-for-like basis? Are you holding or seeing any increases?
Aaron Levie: Yes. So when I look at, again, kind of top deals, customers over $100,000, there’s a lot in there that are consolidation of other vendors in the Box often legacy systems and technologies where Box is increasingly becoming the common standard of that organization. We’re seeing a number of deals where Box Sign is a core component and customers are able to save money on maybe an e-signature vendor, we’re seeing this with Canvas and kind of whiteboard technology. So that’s folding more into Box. And so we’re definitely very happy to see those trends. On the pricing side, we are — we did see kind of pricing improvements in the quarter and have over the past year. And that’s been helpful again sort offsetting some of that more — some of the seat dynamic and we’re going to just — as we move more customers in Enterprise Plus, I think we’ll continue to see that. And then future product plans would obviously have that same dynamic as well.
George Iwanyc: And Dylan, maybe one for you. Can you give us some sense of how you’re looking at hiring? I know you’re continuing to be very mindful with your OpEx. But are you looking at still adding to both the sales and the R&D headcount at this point?
Dylan Smith: We are. But certainly, more moderate growth and very much focused, especially on the R&D side in in scaling in Poland and being certainly hiring everywhere, but that is the emphasis in terms of number of people. And then on the AE front, we are on track and still expect to achieve that initial target of quota-carrying AE growth in the mid-single-digit percentage range.
George Iwanyc: Thank you.
Operator: Your next question comes from the line of Rishi Jaluria with RBC. Your line is open.
Rich Poland: Thanks. This is Rich Poland on for Rishi. Thanks for taking my question. Aaron, you mentioned a little bit about doubling down on key verticals and geographies on the go-to-market side. If we were to just peel that back a little, are there any particular areas where you feel that you’re currently underpenetrated and you see some low-hanging fruit to go after or anything around that?
Aaron Levie: Yes. I mean where we do, I would say, maybe disproportionately well are areas that actually have the greatest amount of security, compliance, data privacy concerns within the customer base. And so if you think about large global multinational corporations, manufacturers, financial services providers, life sciences. We did a major deal at a seven-figure deal at a major law firm. So anywhere where customers are — have highly sensitive data where they have to collaborate on that data in and outside their enterprise, and they often have a layer of compliance requirements within their organization. Those are where we do really well. And I would say in every market, there’s massive untapped upside. And so that leads you to, again, a lot of upside in public sector.
We’re seeing healthy traction in state and local. Obviously, a lot of upside on the federal side. We have quite a bit of upside in life sciences, health care, financial services and insurance. So those are a few of the verticals where I think you’d see disproportionate upside over time.
Rich Poland: Got it. That’s very helpful. And then just a follow-up, I know that the seats aspect seems to be seeing a little bit more pressure. But if we just look at the suites contribution to total revenue and the $100,000 deals, obviously, it seems like there’s a bit of broad-based pressure as well. So I’m just curious, are there any particular aspects of suites that are harder to sell in this environment or anything you’d call out there?
Aaron Levie: I think I wouldn’t call it suites in that sense. I mean I think there’s suites is maybe in the commerce, it’s actually a major driver of our sales motion because customers get even more value when they purchase from Box. So I’d say, overall, it’s actually one of our primary differentiators, if anything.
Dylan Smith: Yes. And maybe also just to clarify, can you talk about some of the other impacts, like on the large deal growth that is not separate from, but it’s actually directly related to seat growth. when you have customers who are not expanding at their typical rates, especially existing customers, those two are actually pretty closely correlated. So that’s not a separate dynamic but actually largely a function of the seat growth dynamics.
Rich Poland: Got it. Very helpful. Thank you.
