Box Files Again For IPO, But Questions About Revenue, Paying Customers Remain

Cloud storage startup Box on Friday filed a new S-1 with the SEC in preparation for a planned IPO, which it hopes could raise up to $162.5 million and give the company a valuation of over $1.5 billion.

However, the Box S-1 filing raises several questions about the planned IPO, especially in terms of revenue and paying customer expectations.

Box filed to sell 12.5 million shares at an initial price of $11 to $13 per share, which at the upper end of that range would raise $162.5 million. Its proposed ticker symbol is "BOX."

[Related: Box Files For $250M IPO: Weak Finances, But Strong Channel Opportunities]

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This is not Box's first run at an IPO: It filed for an IPO in March 2013 that it initially hoped would bring it up to $250 million.

Box has since worked to beef up its enterprise capabilities.

In the filing, Box said it had over 32 million registered users and worked with over 275,000 organizations as of Oct. 31. However, Box currently counts less than 45,000 paying organizations as customers, including over 48 percent of Fortune 500 companies and over 22 percent of Global 2000 companies, the startup said in the filing.

Box's clients include such marquee customers as Ameriprise Financial, Bechtel, Eli Lilly, Gap, Schneider Electric, Sunbelt Rentals, and Viacom.

Box is experiencing revenue growth, with revenue for the nine months ended October 31, 2014 of $153.8 million, up 80 percent over the $85.4 million it recorded for the same period of 2013.

However, Box has yet to turn a profit. Its losses for the fiscal years from 2011 to 2013 rose annually from $50.3 million to $112.6 million to $168.6 million. For the nine months through October 31, 2014, Box recorded a loss of $121.5 million, slightly better than the $125.2 million loss it recorded in the prior year.

In the Box S-1 filing, the company said it does not expect to be profitable in the foreseeable future, as it will have to continue investing in acquiring new customers, developing new services, and building out its data center infrastructure.

Box also admitted in the filing that it faces significant competition, including such heavyweights as Citrix, Dropbox, EMC, Google, and Microsoft.

Box said its future growth will continue to depend on channel partners including alliance partners, distributors, system integrators, and developers, and that it works with solution providers to sell services and identify customers.

NEXT: Exploring The Box S-1, And The Company's Limits

One Box partner who's closely following the planned IPO is Rafi Kronzon, CEO of Cartwheel, a New York-based managed service provider.

While Box has been operating at a loss, and has such a relatively small number of paying customers compared to its total customer base, it does have a sustainable business model, Kronzon told CRN.

Kronzon said he thinks Box needs to come up with a more well-defined identity in the eyes of its customers.

"What are they going to be?" he said. "A storage company? They're trying to dispel that idea because cloud storage is a low-end offering.

"Box is pushing document management and other services, but that's a tough business. If Box calls itself a document management company, it runs into a whole new boatload of competitors. It's the same if it calls itself a productivity management service provider, or a collaboration service provider," Kronzon said.

One of Box's strong points is security, Kronzon said. "For our clients interested in security, Box is easy to sell. In enterprises, security is a major requirement. Many don't want to store data in public clouds."

While all enterprise collaboration providers can prevent the sharing of folders outside the enterprise, Box is unique among its competitors in that it lets users select certain folders to share with collaborators, Kronzon said.

"Sometimes, you want to collaborate outside the enterprise," he said. "Box allows you to set which folders can be shared. Dropbox, Google, and Microsoft don't allow this. But this limitation is not insurmountable for its competitors."

Box declined to answer specific questions about its S-1 filing, but a company spokesperson responded via email, "We're incredibly excited for the coming year and the next phase of Box's growth. As always, our goal is to deliver amazing technology that transforms the way individuals and businesses work."