Anytime a company partners up with IBM, a $US140 billion tech behemoth, it should be considered a big milestone.
Box, the $US2 billion enterprise cloud file storage platform, knows this and couldn’t have been more excited about it during its quarterly earnings call on Wednesday, when it mentioned IBM 38 times in total.
“We are very excited about several developments this quarter, particularly our new partnership with IBM,” Box CEO Aaron Levie said during the call.
The partnership, announced in June, allows both companies to plug-in to each other’s technologies, while working on joint apps and sales strategies. Box benefits by gaining access to IBM’s wide array of technologies and client network. IBM gets to tap into Box’s advanced cloud storage offerings.
That means IBM’s massive sales force will help Box gain a larger footprint in the enterprise market, and also integrate it into some of the iOS apps IBM is building with Apple.
“This is the most significant partnership in Box’s history,” Levie continued. “As a result of this partnership, we are already in discussions with dozens of large global enterprises to become Box customers across a wide variety of industries.”
But given the deal was announced just a few months ago, the partnership only “had a minimal impact” on Box’s actual sales last quarter, Levie noted, adding, “We’re still very early in kind of actually executing on the new transactions and sales.”
Partner and Customer
The partnership, however, didn’t just turn IBM into a strong partner — it signed them up as one of Box’s largest customer too. Levie said that IBM signed one of the four deals exceeding $US500,000 for Box last quarter, and its deal size will only get bigger moving forward, becoming the largest deployment ever when fully rolled out.
Analysts seem to be on board with Box too. Credit Suisse wrote, “We believe that Box’s continued strong churn metrics, large deal momentum, and strategic partnerships (particularly the recently-announced agreement with IBM) underscore Box’s strong competitive positioning in the enterprise market.”
Pacific Crest added, “We believe the value proposition is improving, as evidenced during the quarter by both one of the largest deals in the company’s history signed with IBM and a large strategic partnership with IBM to drive enterprise adoption of joint content-management solutions.”
Box is certainly betting on these efforts to drive it towards profitability. During its earnings, it reiterated that it anticipates being cash flow break even by the end of next fiscal year, while providing improved revenue guidance in the range of $US295 million to $US297 million for the full year. It’s also improving its adjusted operating margin, while continuing to grow at an healthy ~40% clip.
“Every year tens of billions of dollars are spent on enterprise content management, collaboration, content security, and storage technology. We have never been better positioned to go win in this market and we are incredibly excited about the opportunity ahead,” Levie said.
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