NEWS ANALYSIS: The 10-year-old cloud storage and collaboration software and services company has set its initial public offering date for Jan. 22.
By this time next week, Box CEO and co-founder Aaron Levie (pictured
) will breathe easier when he looks at his financials. His company will be IT's newest publicly traded enterprise, and he'll have all the capital he needs to continue to build out his dream company.
The 10-year-old Los Altos, Calif.-based cloud storage and collaboration software and services provider has set its initial public offering date for Jan. 22. It will be the biggest and most important IPO since China's Alibaba e-commerce business went public in September 2014.
Box said in a 230-page prospectus filed with the Securities and Exchange Commission Jan. 9 that it plans to sell 12.5 million shares at $13 apiece and expects to raise as much as $187 million; if that happens, it will have a valuation of about $1.6 billion. Morgan Stanley, Credit Suisse and JP Morgan are the lead underwriters for the offering.
Box, whose financial backers include private equity firm TPG and venture capital firms Draper Fisher Jurvetson, U.S. Venture Partners and Coatue Management, provides 10 gigabytes of free online storage and charges fees for additional space and services, such as secure file transfer, streaming video and enterprise work collaboration tools.
IPO Delayed From Last Year
Levie, a University of Southern California dropout from Seattle who won't be 30 until two days after next Christmas, has been talking about going public for more than two years. In fact, he had aimed for April 2014 to do it but changed his mind. The company subsequently landed $150 million in VC funding last July from TPG, which has kept Box operating as a private company for several months longer than had been anticipated.
Box has banked a total of $546.1 million in VC funding over its 10-year history.
Though sales have been good—it claims about 5 million individual users and about 200,000 business customers—Box has yet to see black ink in its financials. In its required SEC S-1 filing a year ago, Box showed a net loss of $168 million from the fiscal year that ended Jan. 31.
Lately, however, things have been looking up. Box's revenue improved 80 percent to $153.8 million in the nine months ended Oct. 31, and its net loss fell to $121.5 million.
Box's corporate customers include such household names as Ameriprise Financial, Eli Lilly & Co. and Gap Inc.
Can Box Ultimately Succeed for Its Investors?
In two words: You bet.
Box, which doesn't have 200,000 businesses buying its services for nothing, is only beginning to see the market potential it owns. Data creation from billions of devices is never going to slow down, and there simply isn't room for all photos, documents and videos on those devices. Everything has to live somewhere, and Box makes it very easy to store just about anything a user could want to store.
Along with other cloud storage providers, Box previously has come under fire over security issues, but there hasn't been much negative news—if any—about it or its main competitors (Dropbox, EMC Mozy, CommVault, Google, Amazon and others) lately. All of these companies have invested greatly in new and more efficient security processes, and the results appear to be good.
Most of the negative IT news has been focused on security breaches involving retailers (Target, Michael's and Home Depot are just three examples) and government entities (the Department of Justice, the FBI).
But that news pattern could change at any time—don't think Levie and his fellow cloud storage entrepreneurs don't know it; security is Job 1 with all of them. The company that can protect data the best will be the ultimate winner in this sector.
This will be a fun corner of the IT world to watch in 2015.