Box files IPO on the long road to profitability
Enterprise file sharing and collaboration company Box announced Monday night it has officially unwrapped its plans to go public, seeking over $250m in an IPO that will help the company grow amidst a sea of competitors.
Morgan Stanley & Co. LLC, Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC will act as joint book-running managers for the offering, BMO Capital Markets Corp. will act as lead manager, and Canaccord Genuity Inc., Pacific Crest Securities LLC, Raymond James & Associates, Inc. and Wells Fargo Securities, LLC will act as co-managers of the IPO.
In its filing with the US Securities and Exchange Commission, Box said that it had 34,000 paying customers and 25 million users globally.
Many – including some of Box’s competitors – have championed the company’s move to go public, saying it’s a sign these business models around new enterprise cloud services are indeed maturing.
“This is great news as it’s a real validation of the market that we’re playing in,” said Alastair Mitchell, chief executive officer of Huddle.
“The future of enterprise software has well and truly arrived and companies are no longer afraid to try new, innovative cloud technologies,” he added.
But others were less convinced. Vineet Jain, chief executive officer of Egnyte, a Box competitor pointed out that while news of the IPO is exciting even Box told prospective investors not to expect profits anytime soon given the significant losses, $361.2m, the company has already incurred since its inception in 2005.
“This seems to have become a trend lately where companies are being rewarded with huge valuations for simply having a large customer list. This has created a major disconnect from the traditionally successful business model which used to be based on creating profitability and sustainability,” Jain said.
“This new evolution of the business model, with 7 figure funding rounds and 10 figure valuations being the norm, has taken pressure off of companies to be successful in the present but placed a heavy burden on them for the future,” he added.
Box did not articulate a clear roadmap on how it intends to bring the company into the black. But Box chief executive officer Aaron Levie stressed that personal technology and consumers would be essential to its success in the enterprise.
“While our focus on serving organizations is singular, how we deliver on that promise is hybrid: balancing the needs of end-users with those of IT and the enterprise. In the past, this has been a contradiction,” Levie said. “Personal technology is often simple and elegant, yet goes unmanaged by CIOs and CISOs; corporate software focuses on security and integration into the enterprise but is often too complex and constraining for most users. Our approach uniquely balances the needs of both constituents, with years of perfecting advanced security functionality for enterprises, robust logging and controls, and compliance within regulated industries, all while maintaining a focus on end-user simplicity.”