This time last For years, Box fought tooth and nail to keep activist investors led by Starboard Value from taking over the board and dictating the direction of the company. If the activist investors had won, CEO and co-founder Aaron Levie might have been forced to leave and the company could have been sold.
But Box prevailed, and shareholders backing the executive team were rewarded this week with a quarter that exceeded all expectations, including the company’s.
Now that the proxy battle is over, it’s clear that some of the initiatives that Box had built over the years to move forward into the true enterprise market are paying off. Alan Pelz-Sharpe, Principal Analyst, Deep Analysis
Last quarter, Box revenue reached $233 million, up 17% from a year earlier, beating analyst estimates of $229 million, according to the company. The revenue result was also higher than Box’s own estimates that growth would be somewhere around 12%. Shares are up more than 6% for the week as of Friday morning.
When Starboard set fire to the company last year, Box had reported a very different set of quarterly results. Growth was an anemic 8.3%, putting pressure on the company’s leadership to improve growth and profitability.
Looking back with the benefit of hindsight, that quarter marked the low point for Box as the company began an uptick of slow but accelerating growth, as the chart below illustrates:
Levie was understandably optimistic about his company’s results, saying Box’s growth wasn’t coming from one area — it was across the board.
“It’s been everything from small businesses growing rapidly to large enterprises undergoing significant digital transformation. I mean we had some big, big wins [including] major banks and government agencies and major industrial goods manufacturers. So it’s been a very broad base,” he said.
One of the main reasons for the revival of the business is the bundling, with which Zendesk was also very successful last year. It turns out that building a suite of products works well for SaaS companies.
“I think what has been so important from a business model point of view is our move to unified plans. So we have Enterprise Plus, a new enterprise edition of Box with Box Shield, Box Governance, our eSign capabilities, [and others] all in one suite. And that has certainly accelerated our growth and led to more and more customer adoption of our entire platform,” explains Levie.
Alan Pelz-Sharpe, founder and principal analyst at Deep Analysis, a company that monitors the content management space Box operates in, said the proxy battle has been a drag on the company, and now that it’s over, it’s able to been to get ahead.