Enterprise productivity company Box reported results earlier this week for the first quarter of its fiscal 2023, the three-month period ending April 30. Box managed to beat revenue expectations, though it missed on adjusted per-share profit. Shares of the company initially lost modest ground.

You might read the above paragraph and wonder why we’re digging into a SaaS company that had a quarter that appeared to be somewhat mixed in results terms and largely neutral from an investor perspective. The reason is that Box is accelerating out of a period in which external investors took aim at its leadership over complaints about flagging growth; the company managed to fend off activist investor demands and is now reaping the results of the work it did while out of favor with Wall Street.

Box’s revenue expansion decelerated to single-digit percentage points. Since Box went through the activist wringer, we’ve seen other public software companies with similar growth rates come under external pressure. This is what we’re calling the SaaS growth trap — a time when a company’s revenue expansion has slowed, but its profitability has not sufficiently scaled to keep investors content with its performance.


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Public software companies in the trap have to find a way to ignite growth without torching profitability. It’s akin to the position that many startups find themselves in today, with growth expectations staying high as private-market investors are simultaneously less interested in high-burn models. Startups have to keep the growth coming while also paying double attention to their cost structure. It’s a hard path to navigate.

Box managed it, though it took time. The company’s $238 million worth of Q1’F23 revenue was up 18% compared to its year-ago period, a growth rate that bested the 17% it managed in the quarter prior, and the 14%, 12% and 10% growth rates it reported in the quarters stretching back to the first quarter of its fiscal 2022. Notice the upward trajectory — it’s important.

So how did Box manage to get out of the growth trap while also growing its gross margins, operating income and net profit in its most recent quarter? Let’s talk about it. It’s a lesson for public companies, yes, but also one that startups will want to understand as they navigate a more complex and demanding investment market for early-stage technology shares.