The third quarter of fiscal 2020 (ended Oct. 31) was a major one for Box as the company “significantly expanded” its cloud management product offering with the launch of its Box Shield security controls and intelligent threat detection capabilities, according to company CEO Aaron Levie.
“While we only released Shield at the end of last month, we are already seeing more early sales traction than any other add-on product in Box’s history,” he said Nov. 26 on an earnings call.
At BoxWorks in October, the company announced “several major updates that deliver on our three product differentiators: Frictionless security and compliance, collaboration and workflow, and best of breed integrations,” he noted. The company “received overwhelming demand for our new products” at the annual conference, he said.
Starting with Box Shield, the company “showcased our breakthrough security products to help enterprises prevent accidental data leaks through intelligent classification policies and threat detection for content in Box,” he pointed out. “Unlike traditional data loss prevention tools, Box Shield is natively integrated into the flow of work that happens on Box, delivering an unparalleled user experience and greater level of security controls,” he told analysts.
One of the top hospitals in the U.S. bought Box Shield in Q3 to monitor all sensitive content in Box “as it moves across their organization,” he noted. In addition, a global professional services firm that “handles highly sensitive client information purchased Shield to make its business units more productive while adding a layer of security and control,” he said.
During Q3, Box also “delivered wins and expansions with thousands” of customers, including the National Hockey League, Epic Games and Impossible Foods, he pointed out on the call.
“We closed three deals worth more than $1 million, in line with Q3 last year, seven deals over $500,000 versus 11 a year ago, and 64 deals greater than $100,000 versus 57 a year ago,” he told analysts. “While our six-figure metric was impacted by slower than expected growth” in the Europe Middle East Africa (EMEA) region, “we are continuing to see progress in selling the full power of cloud content management to our customers broadly,” he said.
As the company explained at the Box Investor Day in October, it’s “focused on driving a higher volume of deals with our existing customers” – especially those with a “total account value over $100,000, which has now surpassed 1,000 customers, up nearly 20 percent year-over-year,” he said. Box sees a “large market opportunity within our existing customer base alone,” he noted.
During Q3, “more than 80 percent of our $100,000 plus deals included at least one add-on product, showing continued momentum of customers leveraging Box’s advanced capabilities,” he told analysts. Examples of “long-time customers expanding their usage of Box to the full product platform and purchasing add-on products through our bundled offering Box Suites include a six-figure deal with a Fortune 500 insurance and financial services company where Box will replace a legacy” Enterprise Content Management (ECM) technology “as part of the company’s claims and collaboration project,” he noted.
Box also achieved a six-figure Suites deal with a financial services organization that he said “expanded their deployment” of Box by adding the Box Relay platform and Shield to address new use cases with the goal of retiring Documentum.
Although the company has “more work to do, we are in a stronger position to advance our leading product, expand our customer base, and ultimately create a vastly more profitable company,” he told analysts.
Box, meanwhile, expects to “gain leverage as we streamline our sales overlay model and scale back in underperforming regions” outside the U.S., CFO Dylan Smith went on to say. “At the same time, we will be optimizing our workforce locations to improve productivity and reduce costs,” he said, but added: “As we drive these changes across the business, we do not expect to grow total headcount” in fiscal 2021.
The company’s Q3 revenue grew 14% from a year ago to $177.2 million, while billings increased 10% to $171.9 million.
The need for digital transformation has “never been more urgent,” according to Box. On one hand, businesses must operate faster than ever and the greater reliance on partners “requires seamless external collaboration,” while the “hypercompetitive market demands faster cycle times [and] customers expect frictionless, responsive experiences,” it said.
Meanwhile, the risks of cyber threats and regulations are growing, Box noted. As more high value intellectual property flows across the extended enterprise, attacks have become “more frequent and harder to defend on your own [and] global data privacy regulations are becoming infinitely more complex,” it pointed out.