Box Loss Narrows on New Customer Wins, Boosts Guidance

Cloud software company Box reported a loss that was smaller than expected and boosted its outlook for the current quarter and the fiscal year.

Box posted a loss of 28 cents a share, better than the 31-cent loss that analysts had expected. Revenue was $65.6 million, better than the $63.7 million expected.

It ended the quarter with 47,000 companies paying for its services, up from 45,000 previously. Among the new customers is the U.S. Department of Justice, which signed a deal last month.

The company said it expects sales in the range of $286 million to $290 million for the fiscal year, higher than previous guidance. Its shares rose by more than 8 percent in after-hours trading.

Marketing costs, a key metric that tracks the carrying cost of Box’s non-paying customers, rose to $52.2 million, but declined slightly as a percentage of overall sales to 80 percent, from 88 percent last quarter and from 100 percent a year ago.

During a conference call, CEO Aaron Levie said that during the quarter, Box signed five customers who had committed to pay $500,000 or more for Box services, up from two such customers in the year-ago quarter.

In an interview with Re/code, Levie said it was the result of investments made in prior years. “We pay for a sales force in one quarter that maybe doesn’t become productive for a few quarters,” he said. “We’re starting to see some of those investments play out. … When I look forward [at] the kinds of customers we’re beginning to work with in different industries, each new big customer allows us to engage with another.”

Levie said the deal with the Department of Justice may lead to more deals with federal agencies, and the company has hired Sonny Lashmi, a former executive with the U.S. General Services Administration to run its federal business. Other new customers during the quarter include Hewlett-Packard, consulting firm Deloitte, and the burrito chain Chipotle.

Correction: This story previously said that Lashmi had been fired, not hired. Sorry about that.

This article originally appeared on Recode.net.

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