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Prevailing wisdom states that as an enterprise SaaS company evolves, there’s a tendency to sacrifice profitability for growth — understandably so, especially in the early days of the company. At some point, however, a company needs to become profitable.
Box has struggled to reach that goal since going public in 2015, but yesterday, it delivered a mostly positive earnings report. Wall Street seemed to approve, with the stock up 6.75% as we published this article.
Box CEO Aaron Levie says the goal moving forward is to find better balance between growth and profitability. In his post-report call with analysts, Levie pointed to some positive numbers.
“As we shared in October [at BoxWorks], we are focused on driving a balance of long-term growth and improved profitability as measured by the combination of revenue growth plus free cash flow margin. On this combined metric, we expect to deliver a significant increase in FY ’21 to at least 25% and eventually reaching at least 35% in FY ’23,” Levie said.
Growing the platform
Part of the maturation and drive to profitability is spurred by the fact that Box now has a more complete product platform. While many struggle to understand the company’s business model, it provides content management in the cloud and modernizing that aspect of enterprise software. As a result, there are few pure-play content management vendors that can do what Box does in a cloud context.