
Box files for $250M IPO on full-year revenue of $124M, net loss of $168M - bjenik
http://techcrunch.com/2014/03/24/box-files-for-250m-ipo-on-full-year-revenue-of-124m-net-loss-of-168m/
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programminggeek
So, $250M actually falls short of the $292M they are burning through every
year. The net loss of $168M a year means the $250M buys them almost 18 months
of runway.

Their growth looks less impressive when you consider they spent $292M to only
grow revenue $65M.

In short, they are spending $5 to make $1. It's possible the customer LTV is
actually $6 over a period of years, but they might not be able to borrow
enough to make it back in time.

Am I the only one that thinks that a company turning a profit is not like
flipping a light switch? If you have a culture of overspending, you aren't
going to wake up money and start running a tight ship.

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crag
It doesn't matter. The street will eat it up. Wall Street is begging tech to
produce - even if that means no profit. They will line up to invest. Also,
(and probably) because Box is a potential buy-out. Which is probably why they
are doing an IPO in the first place.

Look.. look at Amazon. That company has never posted a profit. And yet every
trader I know is falling over themselves throwing money at them. It's the
belief in investing in something"sexy", and "new".

~~~
ryana
"Look.. look at Amazon. That company has never posted a profit. And yet every
trader I know is falling over themselves throwing money at them. It's the
belief in investing in something"sexy", and "new"."

This is a) a lazy narrative that simplifies the realities of Amazon's business
models and b) flat out false.

The last 4 years Amazon has posted EBITDA of $1.497B, $934M, $544M and $506M
(2010-2013, respectively). (1)

Over that same time period they've had Net Income of $1.152B, $631M, ($39M),
and $274M

So yeah, I'd say unequivocally that $3.481B in EBITDA and $2.018B in Net
Income over a four year time span is absolutely "posting a profit."

1)
[https://www.google.com/finance?q=NASDAQ%3AAMZN&fstype=ii&ei=...](https://www.google.com/finance?q=NASDAQ%3AAMZN&fstype=ii&ei=sLswU5CbEYHm6AHo4QE)

~~~
crag
Actually I do stand corrected.. cause Amazon DID post a profit, after several
quarters of almost no profit or straight-up losses (for the holiday season).

Also this crap about revenue before taxes, interests - etc (your EBITDA) is
just that, crap. It's unreliable because a company can decide what is (and
what is not) included in the calculation. Of course, this means that a company
can change (and many do) this "measure" from reporting period to reporting
period. Remember the Dot-Com bust? Companies that had no value, or any chance
of value, looked great on paper due to the EBITDA.

EBITDA does not represent a company's cash. More like it's cash flow that it
has to service debt (and as I already said, that calculation can be
manipulated by the company). It was designed for this purpose in the 80's -
the leverage buy-out decade.

// END of rant

EBITDA doesn't measure profit. Or the ability to earn profit. And frankly,
it's a cop-out to state to prove a company's value.

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neworbit
I'm somewhat astounded to hear they have 972 employees. I would have
guesstimated somewhere below 200. Even with a huge marketing push, I'm a
little at a loss for what they all do.

~~~
maaaats
Isn't that insanely many people compared to what they deliver? Many more than
DropBox (300+?) and JottaCloud (~10) without me being able to see why.

Edit: You were before me, so added my comment as a reply to you instead.

~~~
_delirium
They have a much higher-touch enterprise sales process, so my guess is that
most of the extra employees vs. DropBox are sales, customer service,
relationship management, etc. Even after the sell, big clients tend to want
dedicated account managers, dedicated support staff they know by name, etc.
(Still, it does seem like a lot.)

~~~
toomuchtodo
Based on their revenues, it looks like they need to start charging more if
that sort of head count is required.

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kevinpet
The IPO is seeking to _raise_ $250M. The S1 doesn't actually say how many
shares they are planning to offer, so you can't say what the valuation would
be. I'm guessing somewhere between 5-10 times the $250M.

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gamblor956
I'm not sure how anyone can look at a growing history of losses due to
increasing customer acquisition costs, in an industry with numerous
competitors, and want to invest in this.

~~~
stanleydrew
How quickly everyone seems to have forgotten the lessons of Groupon.

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simon_
I just read Ben Horowitz's new book, and he describes taking Loudcloud public
as a Hail Mary because private markets were essentially too smart to give them
any more money at a horrible time (while the original dotcom bubble was in the
middle of bursting).

Clearly Box is in much better shape, but it's not too hard to imagine that
maybe they are rolling the dice on an IPO during a super-hot market in
response to feedback from private investors that they were going to have to
raise a down (or otherwise disappointing) round.

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jedberg
$250M feels tiny for a tech IPO (and for an IPO in general).

Does anyone have any data around this?

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acchow
They are looking to issue $250M worth of stock. That's not their valuation.

~~~
jedberg
I understand that, but even that feels low.

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walid
Will this end up devaluing Dropbox in its future IPO?

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arfliw
It will if this IPO is an epic fail, which it looks like it may be...

~~~
walid
This is why I'm concerned. With Google pushing the price of online storage
down and Box filing for its IPO we might end up with a damaged reputation of
online storage companies and result in probably tanking Box's future revenues.
The biggest loser will be us consumers since we'll end up with less choices if
companies go bust.

~~~
rm999
I think the only losers will be cloud storage companies if the industry is
commoditized and margins are pushed towards zero. The industry is only going
to grow, and there will always be competition. Meanwhile, cheaper cloud
storage is better for almost everyone.

But I don't think full commoditization will ever fully happen - there's a lot
of value in trust and dependability in online storage, and these attributes
are difficult to quantify. I'm much more likely to go with dropbox or google
than some startup, even if the startup is offering much cheaper rates. Also,
companies can compete on efficiency and scale, which adds barriers to entry.

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orware
Actually a lot of this is surprising for me...I have a buddy that works there
right now and while I knew there were bleeding some cash from articles I had
read, I was under the impression that they actually were doing better than
that financially.

The close to 1000 employees is also fairly surprising, but I would agree that
it would mostly be on the sales side.

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acchow
Odd, some numbers are "whited out":

"Based on shares of our capital stock outstanding as of January 31, 2014, upon
the completion of this offering, a total of
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
shares of Class A common stock and"

Can't figure out the valuation.

~~~
runako
I think the idea is they fill in these numbers when they get closer to the
offering, using values that make sense given the indicated demand.

~~~
Nicholas_C
Yup. There will be a few iterations of the S-1.

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pearjuice
Pump and dump IPO. Mark my words.

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PeterisP
Is their product actually competitive? I had tried it once long ago, but
currently I don't see any particular niche where it'd be superior to
dropbox/google drive/onedrive/whatever.

What am I missing here?

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bigchewy
applications / companies that have security requirements, e.g. healthcare
needs BAAs to be signed and Box will do that whereas the rest (of the big
players) generally do not

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elpavohombre
What's a BAA? Thanks

~~~
genericresponse
Business Associate Agreement-

It's a HIPPA requirement.

~~~
Kikawala
HIPAA

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oxyboy
Read this as throwing in the towel with Google announcing cheaper storage
plans last week with renewed emphasis on the enterprise mkt?

~~~
lukevdp
It takes a bit longer than a week to organise an IPO, my guess is it's been on
the cards for a lot longer

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dudus
But that Google Pricing cut was certainly a bad timing for Box.

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ASneakyFox
What is box? What do they do? Why do I care that they are losing money?
(Though I seem to already have figured out WHY)

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mindstab
gotta say it, one of the reasons Dropbox is king is good support for all
platforms. Box still ignores Linux so it's a no go for me personally, and my
work.

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glasz
let's gamble, buddies!

