Box IPO: Cloud-Hungry Wall Street Will Get Another Deal

We finally got word on one of the more anticipated public offerings of the year — cloud operator Box has filed for an IPO.

box-ipoThere are no details yet on the Box IPO because the filing was a confidential one, as part of the Jumpstart Our Business Startups Act or JOBS Act, which is meant to make things easier for smaller companies. The open filing will probably not be made public until a couple months.

Box got its start back in 2005. Founders Aaron Levie and Dylan Smith were students at the time, and they saw an opportunity to leverage the cloud to provide for better access and sharing of files. Growth was strong, and Box attracted lots of attention, even snagging an investment from billionaire Mark Cuban.

Box eventually made a shift to the enterprise market, where the customers had large budgets, a big demand for finding ways to improve inefficiencies and a glut of products that were still using traditional technologies.

Box’s website says it all:

“We want to reinvent what businesses can do with their content through Box’s content sharing platform, made for a new kind of worker, a new kind of workplace and a new kind of IT.”

The company has made lots of headway so far, and that’s translating onto paper. Revenues hit the $100 million mark in 2013, which was more than double the previous year’s sales. However, kit’s unclear whether Box is running at a profit.

While the Box IPO will be a significant money draw, Box has been good at raising money so far. In all, Box has taken in $409 million in venture capital from top investors like Andreessen Horowitz, Bessemer Venture Partners, (CRM) and SAP (SAP). The latest round, executed last year, came to $100 million, valuing Box at a cool $2 billion.

Yet Box faces some tough competition, both from broader-scope companies such as Microsoft (MSFT) and Google (GOOG), as well as more specialized companies such as Citrix (CTXS) and SugarSync. Also, Dropbox faces a challenge in that it’s trying to penetrate the enterprise market.

Hence another reason for the Box IPO: By being a public company, Box should have more credibility.

“(Credibility will help Box) penetrate highly regulated industries like financial services, energy and healthcare,” said Alex Gorbansky, who is the founder and CEO of Docurated. “And as a result, will create more opportunities for cloud technologies within those sectors.”

Box should get some help from Wall Street’s appetite for cloud deals over the past couple years. For example, Marketo (MKTO) has snagged a gain of 218% and ChannelAdvisor (ECOM) is up 211% — both went public in spring 2013.

As for the Box IPO itself, expect an offering sometime in April. Box also has selected Morgan Stanley (MS), Credit Suisse (CS) and JPMorgan Chase (JPM) as the lead underwriters.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

©2022 InvestorPlace Media, LLC