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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good day and thank you for standing by and welcome to the Box Inc., Second Quarter Fiscal 2022 Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator instructions]
I'd now like to hand the conference over to your speaker today, Cynthia Hiponia. Please go ahead.
Good afternoon and welcome to Box’s second quarter fiscal year 2022 earnings conference call. I am Cynthia Hiponia, Vice President, Investor Relations. On the call today we have Aaron Levie, our CEO; and Dylan Smith, our CFO. Following our prepared remarks, we will take your questions.
Today’s call is being webcast and will also be available for replay on our Investor Relations website at www.box.com/investors. Our webcast will be audio-only, however supplemental slides are now available for download from our website. We'll 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 Q3 and Fiscal Year 2022 financial guidance and our expectations regarding our financial performance for fiscal 2022 and future periods, including our free cash flow, gross margins, operating margins, operating leverage, future profitability, unrecognized revenue, remaining performance obligations and billings and our expectations regarding the size of our market opportunity, our planned investments and growth strategies, our ability to achieve our long-term revenue and other operating model targets, the timing and market adoption of and benefits from our new products, pricing and partnerships, the impact of our acquisitions on future Box product offerings, the impact of the COVID-19 pandemic on our business and operating results, the KKR-led investment in Box and any potential repurchase of our common stock.
These statements reflect our best judgment based on factors currently known to us and actual events or results may differ materially. Please refer to the earnings press release filed today and the risk factors and documents we file with the Securities and Exchange Commission, including our most recent annual report on Form 10-Q for information on risks and uncertainties that may cause actual results to differ materially from statements made on this earnings call. These forward-looking statements are being made as of today, August 25, 2021, 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 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.
Lastly, while we recognize there's been news around our upcoming annual meeting on September 9, the purpose of today's call is to discuss our financial results. We ask that during the Q&A portion of this call, you keep your questions focused on our performance.
With that, let me hand the call over to Aaron.
Thanks, Cynthia and thank you for joining the call today. We achieved strong second quarter results across all metrics marking our fifth consecutive quarter of achieving both revenue and non-GAAP EPS above our guidance. We delivered second quarter revenue growth of 12% year-over-year, a second consecutive quarter of accelerating revenue growth, billings growth of 13% and RPO growth of 27%.
From our business performance and building momentum, it's clear that enterprises are increasingly making strategic long-term decisions on how to support a remote workforce and digital processes while still maintaining a high level of security and compliance policies. As a result, more customers are turning to the Box content cloud to deliver a secure content management and collaboration built for this new way of working.
Our strong momentum is best illustrated by our customer deal metrics in the second quarter. Our net retention rate was 106% up from 103% in the prior quarter. We had 74 new deals over a $100,000 up 16% year-over-year and we had a 73% attach rate of suite on deals over $100,000 in the quarter up from 49% in the prior quarter and up from 31% in Q2 fiscal '21. We view these strong customer metrics as evidence that we are executing on the right product, one that is well aligned with the three major changes happening around the future of work in the enterprise.
First, hybrid work is going to be a necessity going forward. Second, digital transformation is driving significant change across all industries and third cyber security and privacy threats are increasing at a growing rate as we've seen with recent ransomware attacks. These trends have major implications for how companies work with their content. Content is at the heart of how leading life sciences firms discover, develop and deliver new drugs and treatments, how banks collaborate with and onboard new clients or close deals and how consumer product organizations ideate on manufacturer and scale new products, whether it's a CAD design, a sales presentation, marketing asset, research study, legal contract or financial data, content is our customer's business.
Today enterprises have to purchase and integrate a mix of solutions from disparate vendors to solve the entire content management life cycle. This leads to broken processes for users, security risks due to the gaps between tools, fragmented data and increased costs for enterprise customers. Our vision for the Box content cloud is to integrate and power the complete content life cycle from the moment content is created through the entire content workflow. By leveraging our product leadership and content management, our content cloud will continue to extend into key elements of this lifecycle, including e-signature, content publishing, deeper content workflows, new collaboration experiences, analytics, data privacy and advanced security.
Critical to our success is our ability to execute on our product roadmap, which expands our total addressable market and add value to our core platform with new product innovation. This is why we were pleased to deliver on our product roadmap with the launch of Box Sign, to select customers in late July capitalizing on the trend of more transactions moving from paper-based manual workflows to the cloud, while also addressing an incremental multi-billion dollar market.
Box Sign was developed through the acquisition of SignRequest, a leading cloud-based electronic signature company and a good example of our disciplined approach to M&A. Our decision to acquire this particular technology versus developing internally was driven by time to market with e-signature being the number one requested feature from customers last year. Initial response from customers has been very positive and we're rolling out Box Sign to all business and enterprise customers throughout this fall with a significant roadmap of innovation ahead.
Also over the quarter, we made meaningful updates to our governance functionality to help support customer's legal hold and document retention needs as well as new features within Box Shield to protect the flow of content with advanced machine learning based security features. Our security compliance, data governance and privacy capabilities remain one of the most critical reasons customers choose the Box content cloud and our innovation here is only accelerating.
In addition to these and many other product updates in the quarter, we continue to integrate deeply across the SaaS landscape, a key part of our content flag value proposition, interoperability and strong partnerships with leading technology companies. This is critical to our success at scale building on the great work we've done with so many amazing partners, including Slack and Microsoft, in the second quarter, we announced a new integration with Service Now, legal service delivery application to modernize legal operations, which benefits customers by bringing together Service Now's advanced workflow expertise can minimize manual processing while ensuring confidential legal content is secured on Box's, content cloud.
And we also announced new and deepened integrations with Box for Cisco Webex to make it easier for customers to work securely and effectively in the cloud and we're just getting started. To address our $50 billion plus market opportunity, we're building the end to end platform for managing the life cycle of content and continue to be regarded by customers and analysts as the leading independent vendor for cloud content management.
Of course evolving our product strategy to meet today's enterprise remote and hybrid workforce needs and strengthening our partnerships with leading technology companies are only part of our strategy to drive growth. We have also been methodically enhancing our land and expand go to market model to deliver our full platform to our customers. To accelerate growth, over the past couple of years, we've been actively implementing a number of strategic go-to-market initiatives, including optimizing pricing and packaging, improving sales segmentation and territory planning, driving efficient marketing programs and pipeline generation, increasing sales enablement and doubling down our focus on key verticals, such as life sciences and financial services in the federal government and the success of our go-to-market initiatives and the growing demand for our more advanced capabilities to have our strong suites adoption in the second quarter.
This is why we've been working aggressively to sell the full Box platform through our suites offering to bring all the Box has to offer to our customers. We know that when a customer adopts our multiproduct offerings, we see greater total account value, higher net retention, higher gross margin and a more efficient sales process.
Building on the success of suites, in late July, we also announced a new simplified product addition for our enterprise customers called Enterprise Plus, which includes shield governance, relay, platform, Box Sign, the ability for large file uploads and enhanced support and consulting credits. You can see the success of our go-to-market efforts most clearly when looking at our Q2 customer expansion. For instance, one of the largest banks in the world purchases seven figure deal with multiple products, including key safe governance, relay shield and platform to support new use cases for Box, including claims processing and loan origination and a more secure virtual environment.
The bank has also standardized on Box for internal and external collaboration. An innovative biopharmaceutical company did a six-figure expansion with Box to support its growing workforce following multiple acquisitions to help power its mission to transform the way that drugs are manufactured in the US. With Box, the company's workforce is able to improve collaboration, security and GXP compliance, providing them with a scalable and secure foundation that allows them to work faster.
And finally, a global leader in energy services that has been a Box customer since 2017 expanded its use of Box with a six-figure ELA and the purchase of Enterprise Plus. This will enable them to have a proactive approach to internal threat detection on content, be more prescriptive with security controls around content and automate more than a dozen critical business workflows.
These deals showcase the simplicity and power of our business model. We are focused on expanding our customers through additional seat growth by going wider within organizations, as well as adding more value through additional feature enhancement to new products that drive up customer value and retention. Over the past year, we have been executing on our strategy to reaccelerate growth while also driving continued operating margin improvements and our results in the second quarter, demonstrate that our strategy is working. As a result, we have raised our guidance for the full fiscal year 2022 and are reiterating our long-term targets of 12% to 16% revenue growth and 23% to 27% non-GAAP operating margin in FY'24.
Our strong second quarter results and our confidence in our outlook for this fiscal year and beyond are the direct result of the leadership of our board and the hard work and execution we've been driving as a company. I could not be prouder of the team at Box, and while we still have so much we want to accomplish, I am confident that we have the right team and leadership to execute on our strategy and targets going forward, as well as a world-class board of directors that is focused on and committed to driving enhanced value for shareholders.
With that, I'll turn it over to Dylan.
Thanks Aaron. Good afternoon, everyone and thank you for joining us. As Aaron mentioned, we are proud to have delivered strong top and bottom line results in Q2. We drove an acceleration across key metrics; revenue growth, net retention, and operating profit, clearly demonstrating strong business momentum as we build on our content cloud vision. Revenue of $214 million was up 12% year-over-year an acceleration from our Q1 revenue growth of 11% and above the high end of our guidance. Our content cloud offerings are increasingly resonating with our customers as shown by the strong suites traction and net retention rate we achieved in Q2.
As our customers are increasingly adopting products with more advanced capabilities, 61% of our revenue is now attributable to customers who have purchased at least one additional product up from 56% a year ago. In Q2, we closed 74 deals worth more than a $100,000 up 16% year-over-year. A record 73% of the six-figure deals were sold as a suite up from 49% in Q1 and from 31% in the year ago period. Suites have enabled us to streamline our sales process and drive greater adoption of multi-product solutions resulting in customers who are larger stickier and have a greater propensity to expand over time. We couldn't be more encouraged by our traction here.
We ended Q2 with remaining performance obligations or RPO of $922 million up 27% year-over-year an acceleration from the prior quarter's RPO growth rate of 20% and exceeding our revenue growth by 1500 basis points. Q2's RPO growth is comprised of 16% deferred revenue growth and 37% backlog growth demonstrating Box's stickiness as we continue to sign longer term agreements to support our customer's content strategies. We expect to recognize more than 60% of our RPO over the next 12 months.
Q2 billings of $213 million we're up 13% year-over-year and well ahead of our previous expectations to deliver a growth rate in the mid-single digit range. This billings result reflects the strong sales execution that we saw in the enterprise and SMB with both teams generating double-digit year-over-year sales productivity improvements.
Our net retention rate at the end of Q2 was 106% up 300 basis points from a 103% in Q1. This result was driven by strength and customer expansion and a stable annualized full churn rate of 5%. Based on the strong momentum we're seeing in customer expansion and retention, we expect to deliver additional improvement in our net retention rate over the course of this fiscal year.
Turning to margins, gross margin came in at 74.5% up a 100 basis points from 73.5% a year ago. Q2 gross profit of $160 million was up 13% year-over-year, exceeding our revenue growth rate. We continue to benefit from both our ongoing shift to cloud data centers and the hardware and software efficiencies we're generating in the infrastructure we manage. Our gross margin expectations for the full year of FY'22 continue to be approximately 74%. Our ongoing efforts to improve profitability are paying off as we continue to unlock leverage in our operating model. Q2 operating income increased 47% year-over-year to $44 million, which in turn drove a 500 basis point improvement in Q2 operating margin to 20.6%.
We continue to deliver profitable growth and disciplined expense management. This year, we've made significant progress in building out our engineering center of excellence in Poland, which will help us drive additional operating leverage and efficiencies over time as we transition certain engineering functions away from higher cost California locations. This resulted and are delivering $0.21 of diluted non-GAAP EPS in Q2 above the high end of our guidance and up from $0.18 a year ago.
I'll now turn to our cash flow and balance sheet. In Q2, we delivered cash flow from operations of $45 million up 39% from the year ago period. We also generated free cash flow of $30 million, a year over year improvement of 124%. Capital lease payments, which we include in our free cash flow calculation were $13 million down from $14 million in Q2 of last year. For the full year of FY'22, we continue to expect CapEx and capital lease payments combined to be roughly 7% of revenue. As a result, we ended the quarter with $779 million in cash, cash equivalents and restricted cash.
We completed our modified Dutch auction tender offer at the end of June for an aggregate cost of approximately $238 million and our board subsequently authorized a $260 million share repurchase program. As of August 24, 2021, we had repurchased 2.9 million shares of Class A common stock at a weighted average price of $23.89 for a total of $70 million. Combined with the modified Dutch auction tender, we have repurchased a total of 12.2 million shares for a total of $308 million.
With that I would like to turn to our guidance for Q3 and fiscal 2022. As we announced a few weeks ago, based on our strong Q2 results and our continued business momentum, we raised our full year revenue operating margin and EPS guidance. Note that our share count and EPS expectations factor in only the shares that we have already repurchased today. While we expect to opportunistically purchase additional shares through their manger of the year under our ongoing share repurchase program, the amount could vary significantly based on market conditions and other factors.
Therefore, we're taking a prudent approach and not assuming any future repurchases in our Q3 or FY'22 outlook. For the third quarter of fiscal 2022, we anticipate revenue of $218 million to $219 million representing 12% year-over-year growth and a third consecutive quarter of revenue growth acceleration at the high end of this range. We expect our non-GAAP operating margin to be approximately 20% representing a 200 basis point improvement year-over-year.
We expect our non-GAAP EPS to be in the range of $0.20 to $0.21 and GAAP EPS to be in the range of negative nine to $0.09 to $0.08 on approximately 162 million and 154 million shares respectively. We expect our Q3 billings growth rate to be roughly in line with our revenue growth.
For the full fiscal year ending January 31, 2022, we have raised our full year revenue guidance and we expect FY'22 revenue to be in the range of $856 million to $860 million up 11% year over year. This is an increase from last quarter's guidance of $845 million to $853 million and represents an acceleration from last year's revenue growth. We expect our non-GAAP operating margin to be approximately 19.5% representing a 410 basis point improvement from last year's result of 15.4% and the sizable increase over our previous guidance of 18% to 18.5%.
Due to our strong top and bottom line momentum, we now expect our FY'22 non-GAAP EPS to be in the range of $0.79 to $0.81 on approximately 166 million diluted shares. Our GAAP EPS is expected to be in the range of negative $0.34 to $0.32 on approximately 158 million shares. We continue to expect our billings growth rate to be above our revenue growth rate for the full year of FY'22 and for RPO growth to outpace both revenue and billings growth for the full year of FY'22. We will provide further details into our Q4 expectations on our Q3 earnings call.
Finally, our FY'22 revenue growth rate combined with FY'22 free cash flow margin is now expected to be at least 32% an increase over our previous guidance of at least 30%. Box today is not the Box of 2019. Our strong Q2 performance is the result of the business transformation we began two years ago. This year, we're delivering both revenue acceleration and increased operating leverage for our shareholders proving that our content cloud platform is resonating with customers.
We are well on our way to delivering against our previously stated target of 12% to 16% revenue growth and 23% to 27% operating margin in FY'24 two years from now. In FY'24, we're also committed to delivering revenue growth plus free cash flow margin of 40%.
Before we conclude, I'll hand it back to Aaron for a few closing remarks.
Thanks Dylan. Before we open it up to questions, we wanted to share that on October 6, we will be hosting tens of thousands of attendees at Box Works, which will be an all-digital event for the second year in a row. This year will be another incredible event where we'll share more on our vision for the content cloud and we'll showcase major product advancements. Attendees will also be hearing from an outstanding slate of speakers, including the CEOs of Okta, Slack and Zoom, as well as IT leaders from enterprises like Lions Gates State Street USA, and World Fuel Services among many others.
Q2 was a strong quarter, not only in terms of achieving quarterly revenue and non-GAAP operating results that were above our original guidance, but also in our metrics that showed the power of our Content Five platform, net retention, rate billings and RPO growth are all leading indicators that show the success of our strategy to not only retain customers, but expand our solutions within our existing customer base to drive revenue growth and operating margin improvements and ultimately shareholder value.
Dylan and I would be happy to take your questions. Operator.
Thank you. [Operator instructions] We have our first question coming from the line of Brian Peterson with Raymond James. Your line is open.
Hi everyone and thanks for taking the question. So wanted to hit on the sales with large deals this quarter. Aaron or Dylan, could you maybe unpack that a little bit and I'd be curious, how does that pipeline look for the back of the year because obviously the execution has been strong, but what are you seeing in terms of pipeline generation and how are those customer conversations maybe changed a little bit with the suites offering?
Yeah, thanks Brian. This is Aaron. We're certainly very happy to update the Q2 and overall the first half results when we look at our big deal metrics and our suites adoption that we've seen. And as we look forward and as I think you can tell evidenced in the revenue guidance, we're also feeling really confident about the back half of the year and the momentum that we're going to see on suite expansion the large deals that we're now we're now seeing in the pipeline.
And even within the large deals, a 100,000 plus deals in Q2, we also saw a very healthy number and an increase on the 500 K plus deals as well. So nice set of trends within the customer base right now that we're seeing and overall customers are fully expanding into our multiproduct plans and we're going to keep doubling down on that momentum.
Okay. That's a good segue into my next question. Just, how are you guys thinking about incremental go-to-market best investments going forward? I know sales productivity has been in focus. It looks like that's ramping up. Just curious how we're thinking about headcount, investment going forward? Thanks.
Yeah, I think the message that we've had in the past couple of earnings calls I would say is consistent. We're incrementally investing in go to market capacity right now. And we certainly saw that in Q2 over Q1. And I think the key is though we're going to make investments into the highest productivity regions, the highest productivity segments, the areas where we're seeing increasing momentum. But in Q2, I think we saw that in a number of a number of areas around the world and across segments.
So we're really happy about the results and we're going to incrementally invest certainly consistent with our operating margin targets that we've called out, but we want to make sure that we're doubling down in the areas of growth right now that we're saying, thank you.
We have our next question coming from the line of Steve Enders with KeyBank Capital Markets. Your line is open.
Okay, great. Thanks for taking my question. Just want to get a better sense for what you are seeing out there and on the macro side, impressive growth with RPO of 27% and bookings up 39% there, but I guess what would you kind of attribute the strength to in the quarter on that front? Do you think it's more the macro driven and markets coming towards you, or is this proportion of better sales productivity and better execution on your front?
Yeah, thanks Steve. I think it's certainly been many quarters of work to get here and we also are absolutely seeing very favorable mega trends within our customer base of major moves to the cloud a massive push toward remote and hybrid work, significant issues around cybersecurity challenges and then broad digital transformation tailwinds. And so when you add up those three or four mega tailwinds in our market specifically and then having the right product that we're building out with the right message around the content cloud and then the right team that's able to deliver that product. I think we're just seeing a confluence of events that are certainly contributing to these positive results.
On the macro front, we have seen, and I think we've seen this across our peer group and I'm sure all of you have seen it as well. The macro environment has certainly improved markedly in the past year from a year ago. Customers were worried about the shutdowns that they were doing, the layoffs that they had to enact and that was causing a decrease in IT spending in some sectors of the IT environment and a year later with certainly a strong macro environment, but more importantly, very strong tailwinds in digital transformation and remote work, we are absolutely capitalizing on that with again, the right team and the right product.
And then when you get one level, even more specific, if you look at our multiproduct plans, this is again, this has been a couple years of that finally really coming together nicely. Box Shield is performing incredibly well. Box Relay is helping us advance our workflow story, having an open platform that customers can build on and integrate. Many of our largest deals in the quarter both our $500,000 plus deals and our seven figure deals, were customers that were buying into the entire suite of our technology, building custom applications and integrating us across their software landscape and fundamentally driving new digital experiences for their employees and their customers and partners. So I think we are we're benefiting from again, the right platform and having this content cloud where the market is heading toward.
And just to build on that a bit, this is Dylan, because you asked about sales productivity is as we've shared, our strategy has really been to focus our go to market and sales in particular investments in higher performing regions and geographies. That strategy is definitely paying off and is the approach that we'll continue to take going forward. So for both enterprise and SMB in Q1 and Q2, we saw a strong increase in the percentage of AEs achieving quota, as well as a strong year on year improvements in sales force productivity. So we have been, as Aaron mentioned, incrementally, been adding to that sales force and remain on track to grow the size of that sales force in the low teens as a percentage of this year.
Okay, perfect. Great to hear. And just on Box, I know it's only been out for about a month now, but guess what have you seen in terms of -- in terms of adoption or interest within that product so far?
Yeah, the interest is absolutely been very strong and overwhelming. We are in the midst of rolling the product out to our customers throughout this fall, the select customers that we're getting it out to are starting to adopt it. I was on a call with a fortune 500 customer yesterday and this was the main topic of conversation was being able to roll out Box Sign to all of their end-users and also through the API.
So we're seeing a lot of great use cases emerge. It's getting us into new conversations. It's also helping drive further retention and renewals of customers because customers are getting a fuller suite of functionality in the same platform. And when you look at the categories that are adjacent to content sharing and collaboration, whether it's advanced data security, workflow automation, e-signature content publishing, content analytics, you can see multiple categories that our platform is a natural fit to expand into. And as we laid out over the past year or so, our strategy is to really build out that entire content life cycle in a single architecture. And that message is resonating very well right now with customers. We're becoming a much more, I think, strategic vendor for them, and we're having much more strategic conversations because of that.
Okay, great to hear. Thanks for taking my question.
We have our next question coming from the line of Matthew Cox with JPMorgan. Your line is open.
Hi, good afternoon. Thanks for taking my question. Dylan on the sales productivity, I think you mentioned last quarter, you expected the improvement in productivity to ramp at a more measured pace. And I just want to dig into this to see did sales productivity truly exceed your expectations this quarter? And if so, what happened that you may be changed that versus your expectations the last quarter?
Sure, so last year, as a reminder, we improved overall sales force productivity by 13% year-over-year and that was primarily driven by enterprise because of some of the challenges we saw with COVID in the SMB segment in the middle part of the year. In the first half of this year, we've seen even stronger growth in both enterprise and SMB. So that has outperformed our expectations and to make as Aaron had talked about, we're really seeing the traction of our newer products boosting that performance as well as a lot of the reasons that we've been investing in outperforming as well.
And that's what gives us the confidence as we look at the business on a region-by-region, geography-by-geography basis in continue to grow the sales force and most parts of the business, certainly where the productivity trends have been strong and where we are seeing the greatest momentum and suites and large deals. So as mentioned, we do have more modest expectations for the rate of sales force productivity improvements going forward, but we do expect continue improving that metric in both enterprise and SMB even as we grow the size of our sales force.
Okay. And then can you share how many of your reps are ramped currently, maybe versus last quarter or this time last year?
We don't break out the specific numbers, but we'll say that we entered this year and have a higher percentage of reps who are ramped versus the same time a year ago especially, as in those higher performing regions, we tend to see a stronger sales force.
Okay. And then last one from me. Can you help parse the demand that you're seeing now? How much of the demand can you attribute to maybe a pent up demand or business that might have normally closed last year or in a more normal environment versus anything where you're seeing a secular surge that might suggest something is truly changing or maybe Aaron it's, as simple as what you alluded to earlier, sort of the multi-year effort behind the product strategy is really taking well, just trying to figure out what's maybe a pent-up versus what's a secularly different.
Certainly anecdotally even and given my dozens of CIO interactions in just the past month or so hundreds in the first half of the year, I think we're seeing sustaining trends across the business. When I look at the sectors that are buying and expanding, financial services, life sciences, healthcare, the technology sector, professional services, federal government and the trends are remarkably consistent across the CIO conversations, every single CIO, whether you're the CIO of a 500-person company or a 500,000-person company, you're trying to figure out what is the future of your workforce, and what's your future of your workplace? You know that you're not going to have any analog processes going forward. You know that you're not going to have any on premises infrastructure for the most part. There's certainly going to be some lag to that. But for the most part, you're moving to the cloud.
You know, that you're dealing with massive cyber security and ransomware and data privacy challenges. And so, as you're thinking about this modern architecture, you have major vendors that you have to make sure work together. You've got a Microsoft stack, you've got a Google stack, you have a Salesforce stack, you have a Slack stack or a Service Now stack and fundamentally you need a platform that helps you manage content across those technologies. And when I look at the trends that we're seeing within our customer base, these are long-term architectural -- architecturally driven trends that we believe will sustain and we're just seeing that talent pick up. And that's why, again, we are really focused on driving this continued performance.
[Operator instructions] We have our next question coming from the line of Chad Bennett with Craig Hallum Capital. Your line is open.
Great. Thanks for taking my question. So, if we look at RPO non-current RPO has grown significantly above from a growth rate perspective current RPO for, I think on the order of six quarters now. And, my guess is in this quarter it was significant in terms of Delta between the two. You guys have talked about from a strategic selling standpoint moving to suites and getting the sales force comfortable with that and kind of making sure the repeatability of that sale improves in, it certainly looks like it did this quarter.
I guess can you give us an update on how that impacts contract duration? Obviously you're signing more multi-year deals which show up in that longer-term RPO number. And since the attach rates went up so much this quarter, it'd be good to get some perspective on where they are now versus a year ago.
Sure. So as you see, we did generate improvements in all components of what contributes to RPO growth both on a year on year and quarter over quarter basis. But your point, a lot of that was really due to the outsize backlog growth, which was driven by the large multi-year contracts, the higher volume of those that we're seeing especially as customers are increasingly signing those longer term contracts.
On average, we have seen to your point that that's led contract durations to improve by a little more than a month over the past year, because we do see longer contracts as you'd expect for our customers who are adopting a more sophisticated solutions and our add on products. And so as we see more of these customers adopt suites and move into that category that is one of the big things that's driving that mix shift longer durations and then contributing to the backlog growth as well as overall RPO.
And that increase or impact of a month, Dylan, is there a rough, are we at kind of 1.2, 1.4 and just in terms of duration these days, just for some perspective
Yeah, so it's a little more than a year and a half on average for kind of a total contract duration or average contract duration. But again, those suites and core plus customers tend to be on multi-year deals. And so while we also do see some variability quarter to quarter in those in our RPO growth what this is also being driven on it by in arrowhead this is, there are some customers who are, early renewing their contracts. We're setting those for longer durations once they really buy into that broader suite strategy and it's really a function of bigger customers who are betting on us for the long term.
Okay. And then just in terms of when you speak of acceleration in the business and in particular revenue growth obviously we want to be conservative in guide and expectations going forward. But, the secondary metrics have looked really good relative to real time revenue growth. Let's just say the last two quarters, and the guide forecast and kind of roughly the same type of growth rate you've seen this quarter and last quarter in the second half, is there anything that I know last year, I think this time we're talking about maybe professional services being a headwind and SMB being a headwind, is there anything in your guide that that's a headwind to the revenue growth rate that we might not be seeing? Thanks.
Yeah, so your point as revenue growth, these now reflects the prior 12 months of business performance. As the momentum we're not seeing on our business flows through to revenue, we do expect to see a continued upward trends over time. So ending the year as implied in our guidance for Q3 and the full year at a higher growth rate than either our Q1 or Q2 actuals or Q3 guidance and that's really what gives us the confidence in improving our growth rate over time.
On the headwinds, we are continuing to see both from a revenue point of view because it's trailing 12 months, some of the impacts of the middle of the year in COVID at least from a near term point of view going forward. And then we do even now continue to see some pressure on our professional services business. So that continues to be a slight headwind to the overall revenue growth.
Great. Thanks for taking my questions.
Thank you. The call has now ended. I will now turn the call back over to Cynthia for any closing remarks.
Thank you, everyone for joining us this afternoon. And we look forward to obtaining you again on our next earnings call.
This concludes today's conference call. Thank you for participating. You may now disconnect.