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Aaron Levie: Box Will Help Customers Build, Won't Stop Spending to Get New Ones

Is Box profitable? "It depends on your definition," says Aaron Levie. "But no, we're not."

Sumit Kohli

Cloud storage provider Box will tomorrow introduce tools for companies to build customized applications to manage their own work processes, said co-founder and CEO Aaron Levie in his first public appearance since the company went public in January.

But don’t expect the market’s biggest ding on Box — that it spends lots of money to acquire customers — to change. Levie described Box’s sales and marketing spending as a fixed cost alongside growing recurring revenue from customers that sign up.

“You can expect that we will get more efficient over time, more as a function of revenue growth — not as a function of us spending less on sales and marketing,” Levie told interviewer Walt Mossberg onstage at Code/Enterprise Series: San Francisco on Tuesday night.

Box has a market value of $2.1 billion, down 38 percent just three months after its IPO. When Mossberg queried Levie about Box’s profitability issues, the CEO quickly parried, “It depends on your definition — but no, we’re not.” Then Levie wondered out loud if that comment shouldn’t be scrubbed from the record because the SEC might not like it.

On the eve of a two-hour keynote tomorrow announcing new platform services, Levie didn’t go into too much detail about Box’s new tools. But he explained his company wants to “help dramatically accelerate [its customers’] ability to build really great transformative software.”

Levie argued that Box offers stronger security and compliance options than its fellow cloud competitors, and also that it is more modern than the older ones that are known for helping companies build custom applications.

The Box CEO said his company is benefiting from the competitive boost of two major industry trends: One, the ascendance of all sorts of cloud-based workplace tools; and two, increased competition in every industry, from transportation to hotels, often from tech-enabled upstarts.

“The challenge if you’re these incumbent companies, and you’re trying to deliver on new systems that consumers have, you can’t rely on legacy infrastructure.”

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