Despite widening losses, Box passed a psychologically important point yesterday as its share price rose back above its IPO level on revenues up 43%.
For the second quarter Box reported a net loss of $49.8 million against a year-ago number of $38.3 million. Revenues rose to $73.5 million from $51.4 million.
It was enough for CEO Aaron Levie to declare this to be “a breakout quarter…across multiple dimensions”. He was quick to point to customer momentum. Some stats:
- Box now has 50,000 paying customers.
- 52% of the Fortune 500 are now on board.
- 28% of the Global 2000.
- 33 deals in the quarter were worth more than $100,000, compared to 21 a year ago.
- 4 deals were worth $500,000, against 3 in the quarter a year ago.
- Net retention was 121%.
Levie argued that the firm is delivering on a ‘land and expand’ strategy:
One of our customers, a global construction machinery company, now has more than 32,000 Box seats deployed, having started with just 10,000 seats in June of 2013.
As a part of their enterprise license agreement, they will eventually deploy 50,000 seats. This is a common growth pattern and it demonstrates the increasing value of Box as we become more integrated into our customers' business processes.
While citing customers including AirBnB, Johnson & Johnson, Lionsgate, Monsanto and Uber, it was a deal with IBM to which Levie looked most intently:
I'm also thrilled to announce that IBM is now a Box customer. IBM's IT leadership is world class and we're excited to be working with them. When fully rolled out, this will be one of our largest deployments to date.
Partnering for the enterprise
IBM is in fact a partner as well as a customer, potentially enhancing Box’s reach up into the enterprise space. Levie explained:
IBM's global network of sales professionals will sell Box to their customer base, leveraging their deep CIO level relationships and help with the implementation, training and consulting through IBM global services.
As a result of this partnership, we are already in discussions with dozens of large global enterprises to become Box customers across a wide variety of industries.
At a product level, we are integrating Box and IBM's content management capabilities to give our shared customers a seamless experience across cloud and on-premises solutions. IBM and Box will jointly bring next-generation enterprise content management capabilities like content capture, eDiscovery, workflow and case management to market.
IBM will also integrate Box into select IBM MobileFirst for iOS applications, and we plan to jointly create new apps for customers in industries like healthcare and retail.
Finally, this partnership enables our customers to leverage the IBM cloud, which will eventually allow us to offer customers the ability to meet international, data localization and data residency requirements. We couldn't be prouder of our partnership with IBM and we're looking forward to working with them for years to come.
This relationship is seen as a critical one for Box, he added:
IBM's obviously the leader in a lot of the systems that power enterprises, including enterprise content management, and a lot of the technology that goes into that like workflow, eDiscovery, case management, more than just the sort of basic management of files and sharing files.
What we found with IBM was that our strengths were actually incredibly complementary. At Box, we're 100% focused on building incredibly great end user experience to be able to share and collaborate around content in the cloud. IBM being incredibly great at the sort of depth of capabilities around working with content at scale and in enterprise and how you secure and manage it.
So what we found was instead of IBM kind of entering our space and building out a lot of the end user functionality that we've created, that we can actually partner up, where Box provides the secure file sharing collaboration tool to our joint customers and IBM takes a lot of the DNA and domain expertise they have in - again, all the new - all the advanced ways you work with content and we're jointly developing new solutions around how to go do that.
The relationship with Microsoft isn’t quite as tight , to say the least. Levie still hasn’t had that phone call from Satya Nadella that he’s made no secret of seeking. That said, Box has enhanced its offering for the Office-world:
Building on previous integrations, we make it seamless for our customers to work with both Box and Office 365 now. The over 1 billion Office documents currently stored and shared in Box can now easily be opened and edited with Office online and this functionality will soon be available through Office on mobile and desktop experiences.
This is significant, as enterprises like GE, Toyota, Eli Lilly and thousands of others can now take the best of Office 365 productivity capabilities and combine them with Box's leading secure content management.
Levie added, optimistically perhaps:
We see this as the beginning of a very exciting partnership with Microsoft.
We shall see.
Definitely moving in the right direction, it will be interesting to see the impact that the IBM relationship has on future quarters numbers. Given the nature of the enterprise sales cycle, it could take some time to show through, but it’s clearly a very positive development for Box’s corporate ambitions.