5 ms·

So, $250M actually falls short of the $292M they are burning through every year. The net loss of $168M a year means the $250M buys them almost 18 months of runw

So, $250M actually falls short of the $292M they are burning through every year. The net loss of $168M a year means the $250M buys them almost 18 months of runway. Their growth looks less impressive when you consider they spent $292M to only grow revenue $65M. In short, they are spending $5 to make $1. It's possible the customer LTV is actually $6 over a period of years, but they might not be able to borrow enough to make it back in time. Am I the only one that thinks that a company turning a profit is not like flipping a light switch? If you have a culture of overspending, you aren't going to wake up money and start running a tight ship.

iambateman 13y ago
Could this reflect pressure from investors for a payday? If they feel this is a moment the market believes the business still has "opportunity" even if they don't expect to see it, so they want the liquidity event. Completely agree about the unflippable profitability switch. Profitability is a direction, not a destination.
- digz 13y ago
  Of course. The signal here is that investors want to cash out. Even if investors aren't selling shares as part of the offering (haven't read the details yet, so not sure one way or another) and Box is simply issuing new shares and locking up investors for some period of time, this is a path to liquidity for investors. Generally, selling shares is a signal that insiders view the company as overvalued.. otherwise they would hold. If they needed cash, they would issue debt instruments. The market is hot on tech, so get out while the getting is good.
john_b 13y ago
My understanding of Box is that they focus on enterprise customers more heavily than their competitors. Given upgrade cycles in many large companies, a LTV > $5 is possible. The difficulty and expense of selling a new product to large companies might also explain the marketing budget.
- erichurkman 13y ago
  But how long will it take to get a LTV that is going that high, meanwhile cloud storage costs across the board have a downward price tendency? Or, could Box raise prices significantly enough on some customers to lessen their losses without sending too many customers to competitors?
  - trhway 13y ago
    sounds like very tough situation, worst of both worlds - enterprise sales of a product where competition is on price. Such business have no chances i think until it has a "self-service", read dirt cheap, sales process.
crag 13y ago
It doesn't matter. The street will eat it up. Wall Street is begging tech to produce - even if that means no profit. They will line up to invest. Also, (and probably) because Box is a potential buy-out. Which is probably why they are doing an IPO in the first place. Look.. look at Amazon. That company has never posted a profit. And yet every trader I know is falling over themselves throwing money at them. It's the belief in investing in something"sexy", and "new".
- harvestmoon 13y ago
  Did you know that many extremely popular movies did not technically make any profit?
  - namenotrequired 13y ago
    That's also because they mark as much of it as possible as "expense", so that they have to pay as little as possible to those who were promised a percentage of profit.
- vikp 13y ago
  Amazon had a crazy long term focus: http://www.fool.com/investing/general/2013/11/04/why-amazon-is-not-making-money.aspx http://www.fool.com/investing/general/2013/11/04/why-amazon-... . Their lack of a profit seems to be intentional, in that Jeff Bezos is willing to sacrifice short-term profit for a long-term vision. So the traders are actually making a rational choice here.
  - batiudrami 13y ago
    Plus it's a really weird comparison. One of the oldest, and by far the most successful online marketplaces with long term vision vs. a cloud storage startup who is competing against some major players (Google, Dropbox) and is burning through money. I'm unsure of Box too, I just don't see how Amazon is a reasonable comparison.
    - crag 13y ago
jaequery 13y ago
anyone know if i can short this stock? i know where this ones heading ...

iambateman 13y ago

Could this reflect pressure from investors for a payday? If they feel this is a moment the market believes the business still has "opportunity" even if they don't expect to see it, so they want the liquidity event. Completely agree about the unflippable profitability switch. Profitability is a direction, not a destination.

digz 13y ago
Of course. The signal here is that investors want to cash out. Even if investors aren't selling shares as part of the offering (haven't read the details yet, so not sure one way or another) and Box is simply issuing new shares and locking up investors for some period of time, this is a path to liquidity for investors. Generally, selling shares is a signal that insiders view the company as overvalued.. otherwise they would hold. If they needed cash, they would issue debt instruments. The market is hot on tech, so get out while the getting is good.

john_b 13y ago

My understanding of Box is that they focus on enterprise customers more heavily than their competitors. Given upgrade cycles in many large companies, a LTV > $5 is possible. The difficulty and expense of selling a new product to large companies might also explain the marketing budget.

erichurkman 13y ago
But how long will it take to get a LTV that is going that high, meanwhile cloud storage costs across the board have a downward price tendency? Or, could Box raise prices significantly enough on some customers to lessen their losses without sending too many customers to competitors?
- trhway 13y ago
  sounds like very tough situation, worst of both worlds - enterprise sales of a product where competition is on price. Such business have no chances i think until it has a "self-service", read dirt cheap, sales process.

crag 13y ago

It doesn't matter. The street will eat it up. Wall Street is begging tech to produce - even if that means no profit. They will line up to invest. Also, (and probably) because Box is a potential buy-out. Which is probably why they are doing an IPO in the first place. Look.. look at Amazon. That company has never posted a profit. And yet every trader I know is falling over themselves throwing money at them. It's the belief in investing in something"sexy", and "new".

harvestmoon 13y ago
Did you know that many extremely popular movies did not technically make any profit?
- namenotrequired 13y ago
  That's also because they mark as much of it as possible as "expense", so that they have to pay as little as possible to those who were promised a percentage of profit.
vikp 13y ago
Amazon had a crazy long term focus: http://www.fool.com/investing/general/2013/11/04/why-amazon-is-not-making-money.aspx http://www.fool.com/investing/general/2013/11/04/why-amazon-... . Their lack of a profit seems to be intentional, in that Jeff Bezos is willing to sacrifice short-term profit for a long-term vision. So the traders are actually making a rational choice here.
- batiudrami 13y ago
  Plus it's a really weird comparison. One of the oldest, and by far the most successful online marketplaces with long term vision vs. a cloud storage startup who is competing against some major players (Google, Dropbox) and is burning through money. I'm unsure of Box too, I just don't see how Amazon is a reasonable comparison.
  - crag 13y ago

jaequery 13y ago

anyone know if i can short this stock? i know where this ones heading ...