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Every time someone mentions Box, I find myself obligated to quote one of the funniest passages in recent tech history: the Risk Factors chapter from their S-1 I
by kmfrk 12y ago
Every time someone mentions Box, I find myself obligated to quote one of the funniest passages in recent tech history: the Risk Factors chapter from their S-1 IPO filing:
## Risks Related to Our Business and Our Industry ##
### We have a history of cumulative losses, and we do not
expect to be profitable for the foreseeable future. ###
We have incurred significant losses in each period since
our inception in 2005. We incurred net losses of $50.3
million in our fiscal year ended December 31, 2011, $112.6
million in our fiscal year ended January 31, 2013, and
$168.6 million in our fiscal year ended January 31, 2014.
As of January 31, 2014, we had an accumulated deficit of
$361.2 million. These losses and accumulated deficit
reflect the substantial investments we made to acquire new
customers and develop our services. We intend to continue
scaling our business to increase our number of users and
paying organizations and to meet the increasingly complex
needs of our customers. We have invested, and expect to
continue to invest, in our sales and marketing
organizations to sell our services around the world and in
our development organization to deliver additional features
and capabilities of our cloud services to address our
customers’ evolving needs. We also expect to continue to
make significant investments in our datacenter
infrastructure and in our professional service organization
as we focus on customer success. As a result of our
continuing investments to scale our business in each of
these areas, we do not expect to be profitable for the
foreseeable future. Furthermore, to the extent we are
successful in increasing our customer base, we will also
incur increased losses due to upfront costs associated with
acquiring new customers, particularly as a result of the
limited free trial version of our service and the nature of
subscription revenue, which is generally recognized ratably
over the term of the subscription period, which is
typically one year, although we also offer our services for
terms ranging between one month to three years or more. We
cannot assure you that we will achieve profitability in the
future or that, if we do become profitable, we will sustain
profitability.
http://www.sec.gov/Archives/edgar/data/1372612/000119312514112417/d642425ds1.htm#toc642425_2 http://www.sec.gov/Archives/edgar/data/1372612/0001193125141...
- a2tech 12y agoThats hilarious. Why would anyone invest in them? I work at a very large institution that uses Box and I can tell you its no Dropbox
- JonFish85 12y agoIt's probably the same people who invested in GoDaddy. These are people who's investments I do not understand in the least!
- ctz 12y agoThe risks section of an S-1 will always focus upon the worst case outcomes; if they don't and those outcomes are realised, investors will sue. Other recent S-1s have similar dire warnings, with almost identical language.
- ceejayoz 12y agoHow many are running a third of a billion dollars in deficit?
- x0x0 12y agosaas companies are a little tricker to value. Acquiring customers for say 1/3 of the clv is a great deal for a saas business but will show up as big losses because the acquisition cost is paid out up front while the revenue is earned monthly over the account life. see eg http://a16z.com/2014/05/13/understanding-saas-valuation-primer/ http://a16z.com/2014/05/13/understanding-saas-valuation-prim... if those customers are sticky, box should do well for themselves; if not, they're in trouble
- dagw 12y agoIsn't that just standard language for basically all S-1 filings?
- wwarren 12y agoThe most recent one that comes to mind for me is New Relic's S-1 (http://www.sec.gov/Archives/edgar/data/1448056/000119312514406260/d709327ds1.htm#toc709327_2 http://www.sec.gov/Archives/edgar/data/1448056/0001193125144...): > We have incurred net losses in each fiscal period since our inception, including net losses of $7.5 million, $22.5 million, and $40.2 million in the fiscal years ended March 31, 2012, 2013, and 2014, respectively, and $18.6 million and $19.4 million in the six months ended September 30, 2013 and 2014, respectively. We had an accumulated deficit of $100.8 million at September 30, 2014.... Seems more or less word for word the same to me
- bradleyjg 12y agoNo, many companies that IPO are and have been profitable, so they don't need to warn investors that they've never made a penny and may never do so.
- ChuckMcM 12y agoThat is pretty standard. It is is to give themselves a defense if their stock never goes anywhere and they go bankrupt. They will still get sued by some plaintiff lawyer but they will prevail with an "We never said we were going to make money." defense. A more difficult challenge for them is differentiation amongst all the cloud storage providers (Box, S3, Dropbox, Drive, Etc.) variuos levels of API, various costs, and various features. They have some great customers, and one assumes that those customers will help them focus on the things they need to succeed, but at the end of the day you have to be able to serve their needs and pay to keep the lights on, if you can't well that would be the end of that.
- univalent 12y agoThese are always funny. Read the Risks for the S-1 of 'Restoration Hardware'. It actually goes into (alludes) the CEO's predilection for jumping into the sack with fellow employees!