Box Almost Doubles Revenue as Startup Weighs IPO Timing

Box Inc. almost doubled revenue and narrowed its net loss in its most recent quarter, as the cloud-storage company continues to assess when to go public.

For the three months ended Oct. 31, Box’s revenue rose to $57 million, up 70 percent from $33.6 million a year earlier, according to a filing yesterday with the U.S. Securities and Exchange Commission. While that was slower than the 81 percent sales growth from the prior quarter, net loss also narrowed to $45.4 million from $51.4 million a year ago. Total operating expenses continued to climb, though at a slower rate.

Box, led by Chief Executive Office Aaron Levie, filed its updated financials as it tries to figure out when to go public. The Los Altos, California-based company filed for an initial public offering in March, yet delayed a road show with investors amid a bumpy stock market performance for technology shares. Some investors had also questioned Box’s long-term viability because it is unprofitable and is spending heavily.

In July, Box raised $150 million from TPG Capital and Coatue Management LLC to give it more flexibility about when to go public. The round valued Box at $2.4 billion, up from the $2 billion valuation of its last financing in December 2013.

“Our plan continues to be to go public when it makes the most sense for Box and the market,” said a spokeswoman for the company yesterday. “As always, investing in our customers, technology, and future growth remains our top priority.”

Levie has said that the timing of the company’s IPO filing was a mistake. In an interview with Bloomberg West’s Emily Chang that ran last month, he said “we should not have filed when we did,” and added “that was absolutely a distraction to what our core focus has been.”

Spending Big

The filing showed the rate of some of Box’s spending is declining. Spending on sales and marketing rose 13 percent from a year earlier to $55.3 million, slower than a 20 percent increase in the prior quarter.

Yet total operating expenses -- which stood at $89.3 million in the most recent quarter -- continued to outstrip revenue.

In the filing, Box said the fair value of its common stock as determined by its board as of Sept. 15 was $13.05 a share, up from $12.79 on July 7 and below $17.85 in March. The value of the shares dropped because of the uncertain timing of the company’s IPO, according to a person with knowledge of the matter, who asked not to be identified because the details are private.

Expanding Business

Founded in 2005 by Levie and Dylan Smith while the two were still college students, Box is competing with fast-growing startups like Dropbox Inc., as well as some of the world’s biggest technology companies like Microsoft Corp., Google Inc., Apple Inc. and Inc. Like its competitors, it’s going after a wide range of industries, from manufacturing to finance and media, where employees are sharing documents and data on a multitude of devices.

Earlier this week, Box said it was integrating its online-storage service with security programs from Symantec Corp., Splunk Inc. and Palo Alto Networks Inc. Box is trying to expand by offering companies the same controls for its service that they have over the rest of their networks.

Before it's here, it's on the Bloomberg Terminal.