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| March 12, 2015 | |
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| Good morning, Data Sheet readers! Well, the Box co-founders made it through their first earnings call, where they deftly justified the company’s ongoing losses. Unicorns Lyft and Snapchat have added more backing. Plus, news from electronic-signature software companies Kofax and DocuSign, which are both talking up the market potential for “digital transaction management.” Read on and send feedback to datasheet@heatherclancy.com. | |
| TOP OF MIND | |
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| Box under pressure. Investors knew the cloud software company would lose money for its first official quarter as a public company. So why was it punished so brutally in after-hours trading? Part of the blame was due to a share miscount on the part of those calculating the earning consensus before the report was issued; it was the first thing CEO Aaron Levie addressed during management's call last evening with analysts. If you use the right numbers, he pointed out that Box actually beat expectations with a smaller loss than anticipated. "Just" $1.65 per share for the quarter, on a non-GAAP measure. (For this quarter, the company reported two sets of share counts to account for the IPO.) I was actually more focused on hearing what Box had to say about customer retention, since it's a leading indicator for cloud software companies—and because it just lost a high-profile reference account, Red Bull, to a competitor. (With hints of more to come.) Those metrics were actually encouraging: Box CFO Dylan Smith said "churn" is less than 5%, and the official retention rate rests at 126%. The company now has 45,000 paying customers including a number supporting nearly 100,000 seats like Eli Lilly and General Electric. During the quarter, Box signed at least nine deals above $500,000 in value, Smith. Co-founder Levie added: "This is an important trend that we will keep track of and share with you." Those of you wondering when Box will actually make money: it could become cash flow "break-even" within eight quarters, according to Smith's comments on last night's call. This year, it will continue investing heavily in new sales headcount, more data center capacity, and a new headquarters in Redwood City, Calif. For the upcoming year, Box forecasts revenue of $281 million to $285 million, compared with the $216.4 million it just reported. | |
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| TRENDING | |
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| These days, data isn't the only thing cybercriminals can steal. Sophisticated hackers have figured out ways to hijack domain names, so visitors are sent elsewhere—often places like China, Eastern Europe, and Russia. The Wall Street Journal reports that thieves use stolen sites in many ways. Some try to collect "ransom" from business owners. Others use them to earn advertising money, distribute malware, or dupe personal information out of unwitting visitors. Those most at risk: sites with especially memorable names. Uber's ride-sharing rival Lyft picks up another $530 million. The funding boosts the company's valuation to more than $2.5 billion. The round was led by new investor Rakuten, a Japanese e-commerce giant that obviously decided it was time to pick sides. The money will help build Lyft's domestic and U.S. market share. Another $200 million for Snapchat? Several news organizations including Bloomberg are reporting that the new backer is Alibaba Group, which has been talking to the messaging disruptor since at least last July. The new money values Snapchat at approximately $15 billion—below the potential range of $16 billion to $19 billion reported by Bloomberg in mid-February. There's no official comment on the Snapchat news, but Alibaba is apparently feeling generous this week. It is investing about $160 million in Internet-connected cars through a partnership with Chinese automotive company SAIC Motor. New twist in cloud storage wars. Google is selling a new service called Nearline for data that companies want to save but don't need to retrieve as quickly as other information. (It's akin to Amazon's Glacier.) The hook: it costs just one penny per month per gigabyte. Score one for data privacy advocates, at least in Holland. A court in Amsterdam struck down the country's law requiring telecommunications companies to keep personal data for at least a year. The intent was to aid government surveillance, but European countries are increasingly hostile to blanket data-retention mandates. | |
| THE DOWNLOAD | |
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| Consumers are finally ready for paperless transactions. Are you? The next 12 months could bringing a tipping point in the adoption of electronic-signature technology, thanks in large part to consumer mobile device adoption. Technology companies at the center of this movement, such as Adobe, DocuSign and Kofax, have spent the past several years talking up the potential corporate cost savings of going paperless. Now, the dialog is shifting to how digital transactions can reshape customer relationships. "They expect to be able to do things in real time, on demand," Kofax CTO Anthony Macciola told investors this week, using his 22-year-old son as an example. With the exception of one visit to a local branch to set up his account, his Millennial offspring relies entirely on a mobile phone to consult balances and manage transactions. The idea of logging onto a computer to manage these tasks is "foreign" and "stupid," Macciola said. "All of a sudden, this notion of rapid customer interaction really started to drive things," said Phil Le Clair, an analyst with Forrester Research. "The first phase was about companies reducing the cost of paper processes. Now, it's the customer that doesn't want to come to the office to sign a bunch of documents." As one example, Forrester cites the leasing process developed by electric vehicle company Tesla. The entire transaction is managed with a "tap and sign" application embedded into the car's dashboard. Right now the market for digital transaction management technology is pretty small: maybe $700 million annually. By the end of 2016, however, Aragon Research predicts 70% of big businesses will support an initiative. That could boost revenue related to digital transaction management to $30 billion by 2020. "Some verticals will move even more rapidly to an all-digital arena," the market researcher notes. "For example, in the key financial services vertical, 90% of providers will offer [this technology] to consumers and business customers by year-end 2017." Kofax is investing heavily in mobile technology for enabling digital transactions. This week, it introduced a platform called Mobile ID for capturing proof-of-identity documents usually needed for processes such as opening bank accounts. The software helps validate the images. The company also has made five acquisitions in as many years to support end-to-end digital transactions. The most recent was in early March with the buyout of Aia Holding, which sells software for delivering documents such as bank statements. The others were Singularity (case management), Altosoft (analytics), Kapow Software (integration technology), and Softpro (e-signatures). DocuSign's buyout this week of long-time business partner Algorithmic Research was likewise motivated by rapidly growing interest in digital transactions. DocuSign CEO Keith Krach said his company will gain more than 2,000 customers, including the likes of Bayer, Bechtel, GlaxoSmithKline, McKesson, and Novartis. The deal was timed to coincide with DocuSign's annual customer and partner conference. Also during the event, the company revealed a strategic partnership with SAP, which will sell DocuSign's digital transaction and electronic signature technology alongside Ariba and SuccessFactors applications. The company also has created a foundation to bring digital transactions to non-profit organizations. "People understand that what we are doing is transforming the way that business is done," Krach said. "We are simplifying their lives." | |
| ALSO WORTH SHARING | |
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| Facebook may have to refund parents, for money spent by their children on its social network without their explicit permission. Indian ad-tech company not interested in a buyer. InMobi sends mobile advertising services to more than 1 billion devices globally, which apparently attracted Google's notice. Why Target has an edge over Wal-Mart Stores in e-commerce: mobile savvy. Its two-year-old Cartwheel coupon app has so far driven $1 billion in sales. Modern monitoring. Stealthy startup SignalFx closed a $20 million Series B funding round led by Charles River Ventures and return investor Andreessen Horowitz, bringing its total to $28.5 million. The company's software provides a view into the performance of applications distributed between cloud services and on-site data centers. Customers include Yelp. Data-driven recruiting. Greenhouse aggregates social media, referrals, agency recommendations and other information into a massive hiring dashboard used by more than 450 companies including Evernote and Zenefits. It closed a $13.6 million Series B round led by Benchmark, bringing total funding to around $21 million. | |
| MY FORTUNE BOOKMARKS | |
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| What it's like to be a lesbian in tech by Shalene Gupta Kleiner Perkins zeros in on accuser's inconsistencies in sexism trial by Kia Kokalitcheva Equality for women in STEM fields? Easier said than done by Molly Petrilla Will mobile carriers bend their metrics for the Internet of Things by Stacey Higginbotham Uber wants to recruit a million women drivers: Here's why that's going to be really hard by Claire Zilman This is what Google's version of an Apple Store looks like by Benjamin Snyder
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| ONE MORE THING | |
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| Did you notice that press releases now show up in Google "news" searches? | |
| MARK YOUR CALENDAR | |
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| Microsoft Convergence: Dynamics solutions. (March 16 - 19; Atlanta) IDC Directions 2015: Innovation in the 3rd Platform era. (March 18; Boston) Cisco Leadership Council: CIO-CEO thought leadership. (March 18 - 20; Kiawah Island, South Carolina) Technomy Bio: The big picture on transformation. (March 25; Mountain View, California) Gartner Business Intelligence & Analytics Summit: Crossing the divide. (March 30 - April 1; Las Vegas) AWS Summit. First in a series of cloud strategy briefings. (April 9; San Francisco) Knowledge15: Automate IT services. (April 19 - 24; Las Vegas) RSA Conference: The world talks security. (April 20 - 24; San Francisco) Forrester's Forum for Technology Leaders: Win in the age of the customer. (April 27 - 28; Orlando, Fla.) MicrosoftIgnite: Business tech extravaganza. (May 4 - 8; Chicago) NetSuite SuiteWorld: Cloud ERP strategy. (May 4 - 7; San Jose, California) EMC World: Data strategy. (May 4 - 7; Las Vegas) SAPPHIRE NOW: The SAP universe. (May 5 - 7; Orlando, Florida) Gartner Digital Marketing Conference: Reach your destination faster. (May 5 - 7; San Diego) Cornerstone Convergence: Connect, collaborate. (May 11 - 13; Los Angeles) Annual Global Technology, Media and Telecom Conference: JP Morgan's 43rd invite-only event. (May 18 - 20; Boston) MongoDB World: Scale the universe. (June 1 - 2; New York) HP Discover: Trends and technologies. (June 2 - 4; Las Vegas) Brainstorm Tech: Fortune's invite-only gathering of thinkers, influencers and entrepreneurs. (July 13 - 15; Aspen, Colorado) VMworld: The virtualization ecosystem. (Aug. 30 - Sept. 3, 2015; San Francisco) Dreamforce: The Salesforce community. (Sept. 15 - 18; San Francisco) BoxWorks 2015: Cloud collaboration solutions. (Sept. 28 - 30; San Francisco) Gartner Symposium ITxpo: CIOs and senior IT executives. (Oct. 4 - 8; Orlando, Florida) Oracle OpenWorld: Customer and partner conference. (Oct. 25 - 29; San Francisco) | |
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