Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Box IPO Could Open Strong 2015 For Enterprise Tech

Posted by Tom Foremski - January 9, 2015

Box is again trying to IPO after several failed attempts in 2015. It has priced its shares at the bargain valuation of about $1.5 billion compared to its most recent private valuation of $2.4 billion. 

Reuters' Amrutha Gayathri reported:

Box expects to raise up to $162.5 million from the offering of 12.5 million class A common shares, according to a regulatory filing. (1.usa.gov/1xXTi1b)

Box's revenue rose 80 percent to $153.8 million in the nine months ended Oct. 31, while net loss narrowed to $121.5 million from $125.2 million, a year earlier. The Los Altos, California-based company has warned that it does not expect to be profitable in the foreseeable future.
Box, which rebuffed a takeover offer of over $500 million by Citrix Systems Inc (CTXS.O) in 2011, said it planned to use the proceeds of the offering for operating expenses.

Box received $150 million in funding in July from Coatue and private equity firm TPG. The deal valued Box at about $2.4 billion, the Wall Street Journal reported at the time.

Box's low price is designed to attract attention and boost demand for its shares, at which point it can raise the price to make sure its last investors aren't under water.

A strong IPO performance for Box will be welcome news for many other enterprise tech companies, including competitors such as Dropbox and Egnyte.

Vineet Jain, CEO of Egnyte, welcomed Box's IPO news. "Their delay ended up working to their benefit as it was prudent of Box to get their financials in order for a discerning investor market."

"There is still a massive opportunity in this enterprise market for multiple companies to succeed.  I see there being multiple winners here as Box will succeed on the low end of the market, Egnyte is positioned to succeed as the high end of the market, and of course Dropbox is poised to take on the consumer market."

Egnyte offers a hybrid data storage service set up on a corporation's own servers, and external services to better manage IT security.

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