Notes From Box (BOX) Investor Meetings - Oppenheimer

Oppenheimer analyst, Ittai Kidron, hosted meetings with Box's (NYSE: BOX) CFO Dylan Smith and CSO/SVP of Platform Jeetu Patel. He sees the long term thesis intact but a sequential bookings decline near term as multi year payers are converted to annual contracts and IBM's influence grows. No change to Outperform rating or $21 PT.

4 Key Takeaways:

1) Box’s IBM relationship is hitting stride and driving increased activity with larger enterprises

2) Governance and Keysafe continue to gain traction in regulated verticals

3) Platform development is progressing in line with expectations

4) the competitive environment is benign

IBM's approaching full-stride with integration/joint development efforts ramping and IBM’s sales-force now fully incentivized to sell Box (since March). While IBM’s a late-FY17-18 sales catalyst, it’s already opening doors/discussions with larger customers and a key channel expansion contributor (offering lower sales costs, faster time-to-breakeven). ~20% of Box’s sales are channel-driven, but 30% looks in reach over a moderate time-frame.

Governance appears to be strong across a broad base of customers in regulated verticals (applicable to roughly 50% of Box’s customers), while Keysafe continues to open/seal opportunities with several larger customers. We believe the majority of Governance and Keysafe sales are coming from existing customer upsells with both providing a 20%-30% ASP lift (helping hold overall ASP stable around $9-$10).

Box's Platform sales effort is still in its early days (small FY17 impact). The competitive environment is normal and not pressuring win rates/pricing. Box runs across Google and Dropbox in lower end SMB opportunities.

Near term however, management noted a sharp QoQ decline in 1QFY17 bookings reflecting early renewals in 4QFY16, converting multi-year payers to annual, and IBM’s contribution (4Q-heavy). This point can create near-term confusion.

For an analyst ratings summary and ratings history on Box, Inc. click here. For more ratings news on Box, Inc. click here.

Shares of Box, Inc. closed at $13.00 yesterday.

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