Box was helped in its first quarter (ended April 30) by continued cloud storage demand as the company continued to score major new customer wins, according to company executives.
“We remain confident that our market opportunity and leadership position in cloud content management [CCM] set us up nicely for profitable growth,” CFO Dylan Smith said June 3 on an earnings call.
The company also remains “very excited by this year’s product road map, which will allow us to build on the CCM momentum,” he said.
As Box CEO Aaron Levie pointed out at a February investor conference, the company expects to benefit significantly this year from the one-two punch of an enhanced version of its Box Relay workflow automation solution launching June 26 and then the Box Shield intelligent security solution launch in the second half.
“With the all-new Box Relay, we are the only solution that delivers secure content management workflow and collaboration in a single cloud platform,” Levie told analysts in the June 3 earnings call. Additionally, “because Box Relay is now built natively on Box, it benefits from our infrastructure security, compliant features and our deep integrations with other business process management tools as well as best-of-breed applications” that include Salesforce, he said.
“Enterprises need a cloud content management platform that powers business process automation, secure collaboration across best-of-breed apps and easy custom development for creating new digital experiences and replacing legacy enterprise content management systems,” he told analysts.
To address that demand, Box has “been evolving our product to extend our cloud content management capabilities,” he said, adding: “Simultaneously, we have been advancing our go-to-market strategy to focus more on customer-oriented solution selling. Together, these two initiatives are aimed at transitioning our customers to leveraging Box as a complete platform for secure content management [in] workflow and collaboration. When our customers use the full suite of our cloud content management solutions, we see dramatically higher average contract value and better retention, leading to greater lifetime value for Box. The key indicator of our success in driving this transition is the adoption of our add-on products, which is why we focus on the attach rates and the growth of products like Box Governance, Platform and Relay and in the future Box Shield.”
And Box is “seeing tremendous success from our add-on products,” he said, noting that, in the past quarter, “our add-on product revenue grew by 57 percent year-over-year.”
Overall, “demand for Box remains strong and continues to grow,” he said, noting that major Q1 customer wins included U.K. telecom BT Group and Nintendo Europe. In Q1, Box closed three deals worth more than $1 million, up from one a year ago; six deals over $500,000, up from four; and 33 deals larger than $100,000 versus 35 a year ago.
Although Box “closed slightly fewer $100,000 deals than we anticipated, we are encouraged by the fact that we saw a record 90 percent-plus of these deals include at least one add-on product,” he said, pointing out that’s up from just two-thirds of $100,000 deals including multiple products in Q1 last year.
Total Box Q1 revenue grew 16% from a year ago to $163 million. The company expects to report Q2 revenue of $169 million-$170 million.