Box is getting ready to take its cloud concept to the next level. The online storage company has filed a registration statement with the Securities and Exchange Commission (SEC) for a proposed initial public offering (IPO) of its common stock. But there are questions about the data storage company's ability to innovate and be profitable in the wake of its IPO.
In an S1 document on file at the SEC, Box reveals plans to raise up to $250 million in the IPO. However, the company said the number of shares to be sold and the price range for the proposed offering have not yet been determined. Box was valued at $2 billion in a recent private funding round but could be worth much more in the public markets. General Atlantic, a private equity firm, is one of its largest investors.
Box’s stated mission is “to make businesses of all sizes more productive, competitive, and collaborative by connecting people and their most important information.” A competitor of Dropbox, Microsoft’s OneDrive, Google Drive and others, Box has taken a partnership approach to cloud storage, integrating with Google Apps, NetSuite and Salesforce .com.
According to the New York Times, Box reported revenue of $124.2 million in the fiscal year ended Jan. 31, and had losses of $168.6 million. In the year-ago period, Box posted revenue of $58.8 million, and losses of $112.6 million. In its earnings, the company said there were 34,000 companies that had paid to use the platform, and more than 25 million individuals who had accessed data, documents, images and other material in its storage service, the New York Times reported.
But the opportunity is massive. Market research firm IDC predicts worldwide spending on public IT cloud services will reach $47.4 billion in 2013 and it's expected to be more than $107 billion in 2017. Over the 2013-2017 forecast period, public IT cloud services will have a compound annual growth rate of 23.5 percent, IDC reported. That’s five times that of the IT industry as a whole.
"The first wave of cloud services adoption was focused on improving the efficiency of the IT department," said Frank Gens, senior vice president and Chief Analyst at IDC. "Over the next several years, the primary driver for cloud adoption will shift from economics to innovation as leading-edge companies invest in cloud services as the foundation for new competitive offerings. The emergence of cloud as the core for new 'business as a service' offerings will accelerate cloud adoption and dramatically raise the cloud model's strategic value beyond CIOs to CXOs of all types."
We caught up with Alex Gorbanksy, CEO and founder of Docurated, a cloud document management platform and former analyst at Boston Consulting Group, to get his take on the Box IPO. He told us the public offering is a huge milestone for Box and a clear validation for the enterprise cloud landscape. Still, he said, he has questions.
“Two immediate questions come to mind for prospective investors as we head toward a Box IPO,” Gorbansky said. “First, can they continue to sustain their growth and acquire customers in a profitable way? Second, will they remain an industry innovator amidst the quarterly pressures of investor expectations? The future is wide open for Box -- the IPO should be a very interesting ride.”