Box posts solid Q2 results with focus on existing customers

The cloud content management company beat top and bottom-line expectations with a heightened focus on expanding and renewing business with its customer base.

Box on Wednesday reported better-than-expected second quarter financial results. The results are due in part to the cloud content management company's focus on expanding and renewing business with its existing customer base, Box said. 

"We're going after one of the largest markets in enterprise software, and our focus is on growing existing accounts by driving add-on product options and seat expansions with Box Suites, as well as efficiently driving new logo acquisition in key markets,"  CEO Aaron Levie said on a call Wednesday. 

Non-GAAP net income per share, diluted, was 18 cents. Revenue in Q2 was $192.3 million, an increase of 11 percent from a year prior.

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Analysts were expecting earnings of 12 cents per share on revenue of $189.56 million.

"The world is fundamentally different today than it was just a few months ago as organizations must support remote work and rethink their business processes in the cloud," Levie said in a statement. "Customers are leveraging the full power of Box by adopting products like Shield and Relay and our bundled Suite offering to securely manage, collaborate, and drive workflows around their most important content. Our market leadership enables us to meet the needs of our customers in today's environment and provides us a large growth opportunity going forward."

Deferred revenue as of July 31 was $364.9 million, an increase of 10 percent from a year prior. Billings for the second quarter were $188.8 million, an increase of 9 percent.

Free cash flow in Q2 was $13.3 million, up $32.3 million year-over-year.

Box highlighted its new and expanded deals in Q2 with a number of customers, including Access Information Management, Apleona GmbH, Better Up, Lord, Abbett & Co. LLC, San Diego Zoo Global, Sanki Engineering Co., Ltd., and Stanley Black & Decker.

To drive more and bigger deals, the company in Q2 introduced new products and features into its portfolio. It also rolled out partnerships and integrations with a number of other enterprise vendors like Google Cloud, Webex and Adobe. 

Box currently has 100,000 customers on its platform globally. "We have a significant install base that still has in many cases limited penetration of Box," Levie said. 

The number of large deals Box closed in Q2 wasn't as strong as the company would have liked, CFO Dylan Smith acknowledged on Wednesday's call. Box had 64 deals valued at more than $100,000 versus 68 a year ago. It closed three deals over $500,000, in line with a year ago. There were no deals over $1 million, compared with two a year ago. 

Still, he added, "we have seen an increase in the average contract values of those six-figure deals. In the second quarter that was up 10 percent year-over-year, which helped drive Q2 RPO and billings outcomes."

Additionally, he said, "We are seeing stronger demand for six-figure enterprise deals, and we expect to see solid year-over-year growth in our large deal counts in the third quarter."

For Q3, Box expects revenue in the range of $193 million to $195 million. 

Analysts are expecting revenue of $192.79 million. 

For the full year, Box expects revenue in the range of $767 million to $770 million.