M+E Connections

Box continued to see demand increase for its new Box Sign electronic signature (e-signature) offering in the third quarter (ended Oct. 31), while continued strong customer adoption of Box Relay, Box Shield and the bundled Suites offering helped Box report strong results, according to Aaron Levie, the company’s CEO.

The company “embarked on our expanded vision for the Content Cloud over two years ago and have advanced major parts of the entire content life cycle,” he told analysts on an earnings call Nov. 30.

“The launch of Box Shield and Box Relay broadened our reach into the data security and workflow automation markets,” he said, noting that, “this year, we expanded our content ingestion and migration services with Box Shuttle, and integrated more deeply” with companies including Microsoft, Salesforce, Slack and Zoom.

“Building on the success of these offerings, we launched Box Sign to bring native e-signatures to Box,” he said, calling e-signature “one of the fastest-growing markets Box has ever entered.”

The company is “seeing great momentum with customers already” for Box Sign, he told analysts. “Our initial U.S.-based rollout in October was followed quickly by the global launch of Box Sign, which also included new security and admin features. These new features include password protection for documents sent for signature, SMS-based two-factor authentication to identify the signer, localized Box Sign user interfaces to enable senders and signers to transact in over 20 languages and robust admin reporting to provide enterprise-wide visibility and tracking of documents sent for signature.”

Since the general availability (GA) rollout in October, “we have seen early success in customer adoption and use of Box Sign,” he said, adding: “Third-quarter customers include a premier commercial real estate finance company that expanded its use of Box with a six-figure” enterprise license agreement (ELA) and “purchase of Enterprise Plus, with additional” Box application programming interface (API) and Box Sign services.

With Box, that organization, which he didn’t identify by name, has “centralized all of their content and built a custom deal management portal that deeply integrates with Salesforce and MuleSoft,” he noted. “Box Sign will be replacing their incumbent signature solution, allowing them to digitize more paper-based use cases and expand e- signature use to the broader organization.”

Meanwhile, a “leading IT services vendor to the U.S. Government rolled out the Box for Salesforce integration to power their onboarding use case,” he told advisors. “They previously used an incumbent signature vendor but, to help reduce spend and streamline the onboarding process for their contractors and partners, they have now enabled Box Sign enterprise wide. And earlier this month, we announced that the General Services Administration has selected Box Sign technology for its native e-signature capability.”

Box is “just getting started with our e-signature product road map,” he said, adding: “We plan to continue rolling out advanced e-sign capabilities over the next several quarters to our customers.

As Box executives have discussed over the past several quarters, “security remains a critical driver of our biggest deals,” Levie also said, noting: “Customers are increasingly focused on Box’s security capabilities.”

To meet that demand, in October, Box announced a new malware deep scan capability in Box Shield to combat ransomware, along with enhanced alerts and auto classification updates, he said.

“Box Shield will be able to help customers reduce the risk of ransomware by scanning files at near real time as they’re uploaded to Box,” he told analysts. “Our natively embedded malware detection in the Box Content Cloud delivers a seamless user experience and real-time alerts for IT security teams while helping them avoid multi-solution multivendor complexity.”

Box Q3 revenue reached $224 million, an increase of 14% from the third quarter of fiscal year 2021, with revenue growth accelerating on a year-over year-basis.

The Q3 results “show the success of our growth strategy, which is aligned with the three major trends that are driving the future of work,” Levie told analysts. “These trends are hybrid work styles, the pressures of digital transformation on businesses and the ongoing importance of data security, compliance and privacy,” he said.

Box’s “strong customer metrics are key indicators of the success of our product and platform strategy as more customers are turning to the Box Content Cloud to deliver secure content management and collaboration built for the new way of working,” he told analysts.

In Q3, the company’s net retention rate was 109%, up from 103% in the prior year and up from 106% in Q2, he noted.

Box had 97 deals worth over $100,000 in Q3, up 56% year-over-year including a record number of multiproduct Suites sales, which now includes the Box Enterprise Plus plan with 61 Suites deals in Q3 deals over $100,000, up 177% year-over-year, he pointed out.

Box also had a 63% attach rate of Suites over $100,000 in the quarter, up from 35% in Q3 fiscal 2021, he added. In North America and EMEA, Suites attach rates were in the mid-70% range in Q3, he said, adding: “We expect our overall attach rate number to improve in Q4.”