Box CEO Aaron Levie posted a tongue-in-cheek comment on Twitter yesterday following the release of the cloud storage and collaboration vendor’s latest quarterly numbers: Turns out this start-up thing really is a marathon.
He was alluding to the company’s failure to return a profit, some 13 years since founding, although there’s sight now of break-even coming next year.
That said, the numbers released for Q3 were heading in the right direction, with a 21% year-on-year rise in revenues to $155.9 million and net losses down from $42.9 million to $40.2 million. And there were some strong stats trotted out that deal sizes are on the up as well. For Q3:90,000 paying customers, up from 87,000 in Q2. 57 deals over $100,000 versus 40 a year-ago. 11 deals over $500,000 versus 5 a year-ago. 3 deals over $1 million versus 1 a year-ago.
It’s also significant that more than 80% of the 6-figure deals are multi-product deals with at least one add-on spend, said Levie:Enterprises are understanding that a comprehensive cloud content management offering is critical to their business. In this quarter, customers are increasingly choosing Box over point solutions and fragmented offerings of our competitors.
Particular interest is coming from the governance and platform offerings:As customers have either done enterprise license agreements with us or we’ve been able to bundle multiple solutions together, governance has they come up a core part of that add-on strategy. We are also seeing platform in some key markets, like financial services, and will come from governance in areas like public sector, life sciences and financial services. I think we’re seeing a nice mix of as customers really use us as a backend system for content management across their line of business applications across their customer facing applications, across their core ERP systems, things like information governance, platform capabilities or APIs and then in the future our automation and workflow functionality that we needed in Box, will become very, very core to delivering on that. Customers?
OK, so are the customers that are doing all this? On this point, Levie was disappointingly vague, citing ‘cloaked’ use cases rather than citing specific logos. So:One of the world’s largest asset management and financial advisory firms selected Box in Q3 over SharePoint Online to enable secure external collaboration with its partners and third parties to replace legacy network file shares and develop custom client portals to better serve their most important customers. The firm will be leveraging the full suite of the Box offering, including Box Governance, KeySafe, Multi-Zones and Box Platform across their entire organization with their partners and customers. We also executed on our enterprise license agreements or ELA program, and while still early, we saw more customers choosing to go wall-to-wall with Box in this quarter. For example, a top 10 U.S financial services firm, who is already wall-to-wall with the Box Core ELA, expanded their contract to also include a Box Platform ELA as well. This firm will broaden its use of Box Platform as the content layer for its custom application development across the business. We also closed an ELA with the world’s largest medical device company, who is leveraging Box Governance and Zones to bolster content security and protect their most sensitive data. As part of the agreement, the customer also purchased Box’s custom consulting offering Box Transform to accelerate its digital transformation initiatives.
Looking ahead to 2019, Levie identified a couple of recent developments that he reckons will tick the right boxes for users, starting with Box Skills Kit. Due for general release prior to Christmas, this is pitched as enabling enterprise customers, third-party developers and system integrators to build custom AI integrations of Box:Box Skills kits will unlock powerful use cases, like computer-powered audio, video, and image recognition, by leveraging advanced AI and machine learning capabilities from a wide range of technology leaders like IBM, Google and Microsoft, who are excited to see what our customers and developers create with Box Skills kit starting next month.
And security capabilities will continue to be a priority in 2019, said Levie:Security continues to be a critical differentiator for Box and a primary reason why customers chose our cloud content management platform. At BoxWorks, we previewed Box Shield, a set of advanced security capabilities built on our proprietary advanced machine learning technology that will help customers protect their content and users from internal and external threats. Security teams will be able to apply policies that restrict sharing an external collaboration on sensitive files, for example. And they will also be able to set rules and detect suspicious user behavior and proactively alert customers when behavior deviates Suspicious user behavior and proactively alert customers when behavior deviates from what is normal. While Shield will not be generally available until next year, we are already seeing incredibly strong interest in demand from customers. My take
As a long term Box-watcher, the journey to profitability has been frustratingly slow, but perhaps the tipping point is finally in sight. This latest set of numbers is solid, rather than spectacular. Box has some terrific use cases out there and it would be good to hear more about/from them than the vague references that were on show. Maybe in 2019?
Image credit - Twitter/Box