Box just reported a bang-up Q1, at least when you consider the rocky debut it experienced for its first quarter as a public company.
Highlights include the addition of more than 2,000 paying customers for the cloud storage services upstart, bringing its total to 47,000. New on that list are big-name corporate accounts like Hewlett-Packard, Halliburton, Deloitte, Chevron, and Nationwide along with a big public sector client, the Department of Justice.
During the quarter, in fact, Box recorded 20 deals worth more than $100,000; five exceeded $500,000, according to management.
What’s more, the company’s prospects for the rest of the year are brighter. That’s largely thanks to investments in industry-specific applications and a new developer edition, which is intended to help businesses build compelling, content services and digital services for their own customers.
“We had a great start to the year. … As we continue to scale, we are strengthening our finances and progressing on our path to profitability,” Box CEO Aaron Levie said during the company’s earnings call. That’s quite a contrast from last quarter, when Levie found himself clarifying share counts.
Yes, the cloud software company is still losing money: It won’t be cash-flow positive until the fourth quarter of fiscal 2017. Yes, it spent more than 80% of its quarterly revenue on sales and marketing expenses: that includes at least 20% more sales reps. Yes, it has less cash on hand than three months ago.
But its first-quarter results were definitely better than Wall Street anticipated: revenue rose 45% to $65.6 million; billings were up 58%; and the net loss was “just” $47.3 million. This despite ongoing investments this year both in a new Redwood City, California, headquarters location and an overhaul of its U.S. data center footprint.
Box’s management is raising its outlook as a result. The team expects second-quarter revenue of $69 million to $70 million; full-year results should be in the $281 million to $285 million range.
Why so optimistic?
Levie points to traction behind the company’s industry-centric solutions launched last fall. That’s being enabled by new technologies such as Box’s retention management service (due out this quarter), which helps companies in regulated industries get rid of content they don’t have to keep, and its forthcoming developer edition. The latter lets companies embed Box document management services seamlessly into special applications.
One large financial services company, for example, is building a solution that will allow advisors to share content such as prospectus documents and authorization forms security with their wealth-management clients.
Levie sizes the market opportunity at $25 billion. For now, Box is focused on five sectors; although financial services, pharmaceuticals and health care received the most attention on the call Wednesday afternoon. “We are winning bigger deals and extending our reach into the most highly regulated industries,” he said.
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