Boxing clever as Box picks up more paying customers
- Summary:
- Box's second quarter earnings report was a much happier experience than its first outing, but there are still questions to answer.
A good second quarter showing for Box yesterday with its second set of earnings as a public company sending its stock price up on Wall Street.
The good news:
- Revenue up 45% year-on-year to $65.6 million.
- Billings up 58% year-on-year to $69.8 million.
- 2000 new customers added during the quarter.
- Total customer headcount now 47,000.
The bad news:
- Net loss of $47.3 million.
- Negative operating cash flow of $7.2 million.
- Still way too many customers using the free service.
On those customer numbers, Box highlighted that an increasing numbers are big ticket deals with enterprise customers, such as Hewlett-Packard, Chevron, Halliburton and Nationwide.
It also closed its largest federal government deal to date in May when it signed up the US Department of Justice.
According to the company, those names are indicative of success in pushing up into the enterprise.
During the second quarter there were 20 deals worth more thant $100,000, five of them in excess of $500,000.
CEO Aaron Levie, who spent a lot of time after the firm’s first earnings report trying to explain and clarify stock allocations to a confused Wall Street, was on firmer ground here:
We are winning bigger deals and extending our reach into the most highly regulated industries and security-conscious segments of the market.
My take
A much better earnings day than the first quarter, but with some way to go still. That 45% revenue growth is impressive until it’s compared to the 94% rate reported last year.
And while the 70% year-on-year increase in big ticket, paying customers is encouraging, there’s still just under 90% of the user base that’s on the free service.
Levie reckons that Box will be cash flow positive by the end of the next fiscal year and profitable after that. In an increasingly competitive market sector, Wall Street’s going to need to see more big name paying customers to hold its nerve.