Sacrificing near-term profits for long-term growth remains the strategy at Box Inc., which doubled down on marketing in the second quarter to produce an impressive 43 percent yearly revenue increase that briefly elevated its stock price after the earnings call yesterday afternoon. That didn’t last long, however, with its shares down over six percentage points as of this morning.

That drop comes as shareholders fully internalize the price of that rapid growth, which came out two percent above the average analyst forecast at the expense of an adjusted loss of 28 cents per share, the same as last quarter. But digging deeper into the earnings reveals some reason for optimism about the future prospects of Box’s bottom line.

While profits remained flat relative to its stock year-over-year, the file sharing powerhouse managed to noticeably trim its operating margin from 74 percent of revenue in the same period 12 months ago to 68 percent, which means that revenue is growing faster than expenses. In other words, prioritizing the top-line is starting to pay off majorly for Box nine months after its stock market debut.

And the company is showing no signs of slowing, with total billings having increased even more than its sales to $79.6 million in the second quarter, which represents a 45 percent year-over-year increase.  Chief executive Aaron Levy told shareholders during the earnings call that’s the product of thousands of deals with both new and existing customers.

Much of that can no doubt be credited to the industry-specific extensions that Box has been rolling out over the last few months, which offer tightened controls to help customers meet the specialized data regulations of their respective sectors and various other value-added features. In the healthcare space, for instance, Box is offering medical image management capabilities based on the technology gained through its acquisition of MedXT Inc. last year. 

Photo via Geralt