Box Performs Well on Day One as a Publicly Traded Company

NEWS ANALYSIS: The company obtained $175 million from investors and the stock rose about 65 percent on its first day in the New York Stock Exchange.

Cloud storage and collaboration services provider Box burst onto the publicly traded company scene Jan. 23 with its initial public offering, about nine months later than it had originally planned.

But the wait was worth it. Its first day on Wall Street was wildly successful, with the company obtaining $175 million and the stock rising about 65 percent on its first day in the New York Stock Exchange. It had been priced at $14 on Jan. 22, a click above the original indicative range of $11 to $13. The stock, whose identifier naturally is BOX, closed at $23.23.

It was the biggest and most important IPO since China's Alibaba e-commerce business went public in September 2014.

Twenty-nine-year-old Aaron Levie, co-founder and CEO of the 10-year-old Los Altos, Calif.-based company, had wanted to do the IPO sometime last spring. But some operational and market factors last year delayed his plan.

But that's all in the past. "We're in the midst of a profound technology shift, as businesses of all sizes move their critical information and processes to the cloud," Levie said. "It's an incredible time to be building an enterprise software company, and we couldn't be more excited about Box's future."

Key Numbers From the IPO

Here are some of the key facts and figures from the IPO:

--Box sold 12.5 million shares Jan. 23 for a total of $175 million;

--The company plans to use about half the funds from its sale of shares to grow its customer base via sales and marketing;

--Levie owns nearly 4 percent of the company, with early investors Draper Fisher Jurvetson, U.S. Venture Partners and Coatue Management owning roughly 40 percent combined;

--Box has about 32 million registered users, with an astonishing 99 percent of that user base made up of employees of Fortune 500 companies, according to its public documents.

Levie started Box in Seattle in 2005 primarily to serve consumers but has since changed strategy. Box now aims its cloud-storage and collaboration-tool services at enterprises. It has key partnerships with companies such as VMware (for mobile app development), Samsung (for integration on mobile devices), Google, NetSuite and others.

Cloud storage and enterprise collaboration industry leaders weighed in with eWEEK on Jan. 23. Their perspectives and opinions were all over the board about the company and its IPO.

Tien Tzuo, CEO and founder of business productivity suite provider Zuora, told eWEEK that "the Box story is not just about the cloud. We are in the midst of a global, once-in-a-century shift in business models away from buying products to subscribing to services. Because it's affecting practically every industry, a seismic shift like this has the potential to be bigger than the Internet.

"After a lot of misunderstanding and lazy thinking about Box's financial model last year, the investment community is finally starting to get it. Box is a great business that's going to be around for a long time."

So what does Box's public debut mean for the subscription cloud-service industry as a whole?

"Tech companies may be spearheading the shift to subscriptions, but they're definitely not the only ones," Tzuo said. "In addition to enterprise services like Box, in the next few years you'll see subscription plans for connected automobiles, smart home services, air travel, industrial equipment, household consumer products, luxury goods, the list goes on. Some of these subscription models will be from the next big tech IPO, but many will be from older, more familiar brands who are acknowledging a sea of change in consumer preferences from ownership to access.

"It's a huge vindication for Aaron. Another college drop-out makes it big! If I was an Ivy League college right now, I'd be worried about Silicon Valley brain drain," Tzuo said.

EMC Syncplicity General Manager Jeetu Patel, whose division offers a popular work collaboration and productivity app for mobile devices, said, "From our perspective of what we offer to our customers, absolutely nothing will change in how we compete in this market. We are extremely excited about what we have to offer, and how we have very clear differentiation from Box. That said, transitioning from a private to a public company has a dramatic impact on any organization.

"You now must deal with an unprecedented level of transparency that invites scrutiny from employees, customers, partners, analysts and investors, not to mention the media. Rather than it being a game of how much buzz you can generate around your company and the market, you are now judged by your public performance, and you receive a grade every three months. Going through the IPO process and reporting on the good, the bad and the ugly of your financials gives you a small taste of this scrutiny, and its impact on your employees, investors and customers."

Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 13 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...