Box: EU Cloud Regulations Have Hindered Our European Growth

Brexit and beyond

Of course the UK might not be in the EU for much longer. Box’s international expansion, at least in Europe, has been spearheaded from its London office.

Levin denied Brexit will have much impact on its strategy: “We’re fortunate to serve European customers through network of offices. Some through UK and some on continental Europe and we will continue to do that.”

One of the ways Box has been making itself more attractive to customers outside the US is Box Zones, which is an option to store data in certain parts of the world.

At present, this is done with Amazon Web Services (AWS) data centres, but Box has partnerships with IBM and Microsoft (and, announced at BoxWorks, with Google), and Levin believes this vendor neutral approach is the best for customers.

“The beauty of our position strategically is we can in theory leverage the data centres from a set of providers. We can use IBM, AWS data centres if they’re the best situated. We’re unique in that regard because we’re not wedded to one provider. You’re not going to see OneDrive hosted in an AWS data centre any time soon.”

Future of the business

International expansion and improved compliance are necessary if Box is to grow – and for the public company to turn a profit.

Box has traditionally spent significant amounts on sales and marketing in a bid to attract new customers. Its second quarter revenue was up to 30 percent to $95.7 million and sales and marketing costs are largely flat – up to $60.1 million from $58 million the year before.

The company still records losses, but Levin said the figures are evidence of market opportunity. And once customers are retained, the proportion of revenue spent on marketing will come down, he claimed.

“The business model is inherently profitable,” he said. “As we scale and grow in size and as a larger amount of our revenue comes from existing customers, we will become profitable.”

Quiz: What do you know about the cloud in 2016?