According to a report published earlier this year, the global cloud storage market is estimated to grow from $30.70 billion in 2017 to $88.91 billion by 2022, translating to an annual growth rate of 23.7% over the five year period. The robust industry growth is translating into stellar performance by Billion Dollar Unicorn players like Box (NYSE: BOX).

Box’s Financials

Box’s first quarter revenues grew 20% over the year to $140.5 million, ahead of the market’s expectations of $139.7 million. Adjusted earnings for the quarter came in at a loss of $0.07 per share, better than the $0.08 loss per share anticipated by the market. Its billings grew to $116.7 million, better than the Wall Street estimate of $113.1 million. The company added nearly 3,000 paying customers during the quarter, including names like Dubai Airports and Komatsu. At the end of the quarter, Box had nearly 85,000 paying customers.

Despite the stellar performance, the market was not too pleased as it is worrying about slowing growth rates. A year ago, Box had delivered 27% in revenue growth.

For the current quarter, Box forecast revenues of $146-$147 million, and a net loss of $0.06-$0.05 per share. The Street had forecast revenues of $146.1 million and a loss of $0.07 per share. Box expects to end the year with revenues of $603-$608 million and non-GAAP earnings per share of ($0.19)-($0.16). The Street is looking for revenues of $606.4 million with a non-GAAP loss of $0.18 per share.

Box’s Product Enhancement

To drive growth, Box is focused on two key objectives – innovating in cloud content management and advancing its global go-to-market efforts to reach more enterprises around the world. Within product innovation, it made the Box Drive product generally available in the quarter. Box Drive offers a simple way to stream all files in Box right to the desktop, thus eliminating the need for legacy on-premises network file shares. It also initiated the beta for its new Google Suite integration and the general availability of the new integration with Apple’s productivity suite iWork.

Within enterprise customers, Box is seeing strong demand for its Workflow product Box Relay, which has been developed jointly with IBM. It is continuing to develop additional automation features for repeatable business processes within Box to help simplify the customer’s collaboration needs.

Within its advanced enterprise-grade security and compliance capabilities, Box also introduced several updates to help industries move to the cloud. It released Box Admin Insights Dashboard for administrators. The platform offers visibility into key collaboration and security insights. It also released metadata-driven retention as a part of Box Governance, so that enterprises can see increased flexibility and control over their data.

To drive its global go-to-market efforts, Box is focusing on growing average contract value, strengthening relationships with existing customers, and adding new logos through international growth. It saw significant growth in Japan with wins like Mitsubishi Motor Corporation, Hitachi Technologies, and Pokémon.

Box’s Acquisitions and Potential Acquisition

Earlier this month, Box announced the acquisition of Progressly, a workflow software company, for an undisclosed sum. Redwood City-based Progressly was founded in 2014 and has raised $6 million in funding so far. The acquisition is expected to help improve Box’s workflow offering as it will be able to build workflows that not only run within Box, but can also integrate with external workflow engines like Pega and Nintex and build more complex automation tools and services.

Box has already been improving its workflow offering through its partnership with IBM. IBM has also helped Box expand its market reach. But given the deep foundation that the two companies are laying together, I wouldn’t be surprised if IBM itself plans on acquiring Box.

The stock is trading at $26.71 with a market capitalization of $3.72 billion. It touched a 52-week high of $28.68 in May this year. It has recovered from a 52-week low of $17.25 it had fallen to in August last year.

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