M+E Daily

Box is seeing strong initial demand for its recently-launched Box Relay and Box GxP Validation solutions as the company readies the launch of its Box Skills artificial intelligence (AI) and machine learning offering in the first half of this year, according to CEO Aaron Levie.

Box Relay is the workflow tool it co-developed with IBM that enables users to easily build, manage and track their own workflows. Relay was announced at the BoxWorks conference in September 2016.

Relay became generally available in Box’s fourth quarter and fiscal year (ended Jan. 31) and there was “strong initial uptake,” Levie said Feb. 28 on an earnings call. “We have more than 50 customers deploying Relay right now for use cases from automatic sales document processing to HR onboarding,” he said.

Relay already started rolling out as part of a beta test to some of Box’s data customers and the initial feedback had been promising, Levie told analysts in March 2017.

Box GxP Validation is targeted at life sciences organizations and enables pharmaceuticals, biotechnology and medical device businesses to “develop, validate and operate their GxP compliance standards within Box,” Box said in announcing that solution in January. GxP Validation “accelerates the validation process, and lowers risk via use of daily tests to assure a continued state of compliance for the Box cloud content management platform,” it said at the time. GxP is the acronym that refers to regulations and guidelines that life sciences organizations must adhere to.

“GxP has seen great early traction with customers around the world and will help companies retire legacy” enterprise content management (ECM) systems, Levie said Feb. 28.

Box Skills was announced at the most recent BoxWorks, in October, where the company previewed three initial Box Skills that it said were in development and leverage machine learning tools from IBM Watson, Microsoft Azure and Google Cloud to solve common business use cases.

Those initial Box Skills were: Audio Intelligence, which uses audio files to create and index a text transcript that can be easily searched and manipulated in a variety of use cases; Video Intelligence, which provides transcription, topic detection and detects people to allow users to quickly find the information they need in a video; and Image Intelligence, which detects individual objects and concepts in image files, captures text through optical character recognition (OCR), and automatically adds keyword labels to images to easily build metadata on image catalogs, Box said.

The company expects Box Skills will become available in beta in the first half of this year, Levie said Feb. 28. He called it “an important element in our overall intelligence strategy,” telling analysts: “Our platform neutral approach to AI services and open architecture enables us to work with Google, Microsoft, Amazon and IBM to ensure that our customers can get more and more value from their content in Box. With Box Skills, enterprises will be able to uncover insights and reimagine business processes that have traditionally been too costly or impractical to digitize.”

This “next wave” of Box add-on products “should help drive incremental” annual contract value “gains and win rates over the medium term” for Box, MUFG Securities Americas analyst Stephen Bersey said in a research note. GxP Validation “should further strength Box’s competitive position in industries that are regulated by the FDA,” while Skills and Relay are products that “increase the company’s value proposition to less-technical users, which should result in incremental seat purchases from existing Box customers, as well as improved win rates against other cloud content management systems,” he said.

Box also recently announced its solution for global data privacy preparedness ahead of the European Union’s General Data Protection Regulation (GDPR) becoming enforceable starting May 25. “In today’s heightened security and regulatory landscape, traditional approaches to data protection are obsolete,” Levie said on the call. “The levels of certification we have reached” for GDPR and other regulations is a “significant differentiator” for Box, he said.

Levie echoed those comments on GDPR and other compliance regulations while speaking at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco March 1. Box sees the “giant umbrella of security, compliance, risk” and data privacy as “major tailwinds for our business,” he said there. Many companies today do business in many countries globally and each region has 
“different data privacy requirements,” and the rules keep changing, he noted. As a result, a growing number of companies will have to “reevaluate their fundamental architecture for how they manage unstructured information in the enterprise,” and Box is well-positioned to “capture a significant portion of customers that are ding that reevaluation,” he told attendees.

The company reported Q4 revenue grew 24% from a year earlier, to $136.7 million, while its loss narrowed slightly, to $32.7 million (-24 cents a share), from $36.9 million (-28 cents a share).

Box also “delivered our first full year of positive free cash flow, marking a significant improvement of more than $30 million over last year,” Levie said on the earnings call. The company also “ended Q4 with a record number of six-figure deals and we now have more than 82,000 total paying customers globally,” he said.

Although the company “surpassed $500 million in annual revenue this year,” he conceded: “We have to evolve even further to achieve our greater ambitions.” To that end, he said, Box is now “focused on reaccelerating revenue growth to scale to $1 billion in revenue and beyond” for the current fiscal year and is “also further sharpening our focus on larger enterprises.”

About 60% of Box revenue already comes from customers that have more than 2,000 employees but “there is significant additional opportunity within those larger accounts,” he said. Box is also “increasing our focus on self-service as a fulfillment channel to help customers in all segments quickly and easily buy new products,” he said.