Box Inc. plans to raise $250 million in an IPO
Box Inc., an enterprise cloud storage provider, recently revealed its plans to raise up to $250 million in an initial public offering as the cloud storage market heats up. In its S-1 filing, the company revealed that it plans to use the proceeds for sales and marketing and other initiatives to expand its business as it faces growing competition from tech giants such as Google (GOOG), Microsoft (MSFT), EMC (EMC), Apple (AAPL), and Amazon (AMZN) as well as growing start-ups such as Dropbox Inc.
Box continues to take losses
Although Box’s revenue has grown consistently in each quarter, its loss from operations has also grown. As per Box’s S-1 filing, the company’s revenues have increased from 10 million in April 2012 to 38.8 million in January 2014, while its loss from operations have increased from 20.2 million in April 2012 to 40.2 million in January 2014. The main reason for the losses has been the jump in sales and marketing costs required to attract new customers. Despite losses, the market will look for positives when the actual IPO comes. Box now has more than 25 million registered users, including many who use the service through subscriptions paid by their employers, while it has 34,000 paying organizations as its customers.
Opportunities and risks in the cloud storage market
Demand for online storage—part of a phenomenon known as “cloud computing,” has been rising with the growing popularity of smartphones and tablets that have made it easier for people to go online wherever they have an Internet connection. Unlike its competitor, Dropbox, Box has a strong focus on enterprise storage and file sharing. The enterprise business is more stable in nature compared to the consumer business, which should make Box an attractive proposition when its IPO actually comes to the market.
However, there are some risks attached to the company as well. Box’s prospectus acknowledges there are low barriers to entry in this field, and several rivals have more name recognition and larger budgets to spend on marketing. Moreover, the competition for online storage is growing, with tech giants including Google and Microsoft offering low-cost options, while Dropbox has also started to woo business customers.