Today: Los Altos cloud-storage startup Box files for a $250 million initial public offering.
The Lead: Box wraps up its IPO plans into a preliminary filing
Aaron Levie's high-flying Los Altos cloud storage startup, Box, officially filed for an initial public offering Monday, announcing preliminary plans to raise $250 million.
The $250 million Box said it is targeting in Monday's filing is an estimate, meant to help calculate expected fees that will be paid to underwriting banks, so the actual total could be quite different. Box has already attracted roughly $360 million in venture financing from big names such as General Atlantic, Draper Fisher Jurvetson, Intel Capital, Andreessen Horowitz and cloud pioneer Salesforce.com, with the most recent round reportedly valuing the company at roughly $2 billion.
Box is still led by co-founder Aaron Levie, who formed the company with Chief Financial Officer Dylan Smith while just a college sophomore and helped build it into one of the hottest names in enterprise software.
The company's software is mostly used for cloud storage of data for instant access from a variety of devices, making it easier for workers to accomplish the same task from work computers, personal mobile devices and more. Box offers a "freemium" model, which gives users 10 gigabytes of storage (roughly enough to hold 10,000 emails or 2,000 music files); once enough users establish a beachhead within a company, Box sales representatives swoop in to sell the bosses on such features as secure file sharing and collaboration.
"Box's journey began in 2004 with a simple and, in retrospect, obvious idea: it should be incredibly easy for people to get to their files from anywhere," Levie wrote in a letter to prospective investors that was included in Monday's filing, later adding, "in some areas starting from a blank slate was the product of inexperience, as neither Dylan nor I had storied careers at IBM or Oracle (though I did use Lotus Notes once in an internship)."
Monday's paperwork allows investors to get their first peek into Box's finances. which nearly hit the $100 million revenue target Levie predicted for 2013. In its most recent fiscal year, which ended on Jan. 31, Box generated revenues of $98.2 million, more than doubling the previous year's total of $44.5 million. The company is bleeding red ink, however: a loss of $112.5 million in 2012 ballooned to $168.6 million in 2013.
The company admitted in the risk factors included in Monday's filings that it has struggled with losses, and said that it does not expect that path to change anytime soon.
"These losses and accumulated deficit reflect the substantial investments we made to acquire new customers and develop our services," the document read. "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."
Still, Box has managed to build a strong user base of more than 25 million people, and signed on more than 34,000 paying enterprise customers, including Chevron, the San Jose Unified School District, eBay and Gap.
One of Box's biggest competitors lies just up Highway 101, as San Francisco-based Dropbox has received richer valuations in venture-financing rounds and could be the most valuable startup yet to head for the public markets.
Box will work with Morgan Stanley, Credit Suisse and JPMorgan, among other banks, on the offering and list its shares on the New York Stock Exchange under the ticker symbol BOX. The company will have a dual-class stock structure, which will allow early investors, as well as Levie and other early stakeholders, to have more voting power than those who invest in the company on the open market.
Box earlier filed for an IPO privately with the Securities and Exchange Commission, allowing the company to work with the regulatory agency to ensure any problems were corrected before it was made public Monday. Since the filing has already been vetted, Box could exercise its IPO earlier than is typical after the first filing of the S-1 prospectus; Twitter also used the process for its IPO, and the San Francisco social-networking firm went public less than a month after its filing was released.
SV150 market report: Technology stocks sink after Apple-Comcast report
Technology stocks suffered Monday on Wall Street, with the tech-heavy Nasdaq falling 1.2 percent amid much smaller declines for broader-based indexes. The SV150 index of Silicon Valley tech stocks performed slightly better than the Nasdaq as Apple gained following reports of talks with Comcast, though that news may have hurt another big-name valley company.
Reports surfaced Sunday that suggested Apple is in talks with Comcast on offering Apple TV set-top boxes that work with the cable giant's television offering, which could signal process in the Cupertino company's long-awaited TV upgrade. Despite doubts about the report Monday -- including tough obstacles to a done deal and a suggestion that the arrangement as described would be illegal -- Apple gained 1.2 percent to $539.19, a move that might have also benefited from analysts predicting an iPhone 6 will arrive in late summer or early fall. Meanwhile, Los Gatos video-on-demand company Netflix tanked Monday, falling 6.7 percent to $378.90, it's worst one-day effort of the year, after Oracle Investment Research chief market strategist Laurence Balter told the Mercury News that the reported plan "drives a stake right in the heart of the Netflix subscriber and business model."
Cisco dropped 0.3 percent to $21.57 after announcing a $1 billion initiative to build up its cloud-services offering, in a challenge to Amazon, IBM and other companies that offer data center space on demand. Palo Alto Networks fell 4.5 percent to $73.13 after jumping into the security-consolidation spree with its $200 million acquisition of Israeli startup Cyvera; rival FireEye, which offers similar endpoint protection to Cyvera, fell harder, losing 8.8 percent to $63.50. Pandora plunged 7.7 percent to $31.39 after Billboard reported that Apple is considering offering iTunes on Android devices, and Google dropped 2.1 percent to $1,157.93. Tesla Motors declined 3.8 percent to $220.17 as Texas Gov. Rick Perry discussed the company's bid to sell cars in his state, as well as the possible Gigafactory operation.
Up: Symantec, Oracle, Apple, Advanced Micro Devices, Gilead
Down: Pandora, Netflix, Zynga, Facebook, LinkedIn, Twitter, Tesla, SolarCity, SunPower, Yahoo, NetApp, Adobe, Yelp, Electronic Arts, Google, Workday, Salesforce, Hewlett-Packard
The SV150 index of Silicon Valley's largest tech companies: Down 12.43, or 0.81 percent, to 1,528.95
The tech-heavy Nasdaq composite index: Down 50.4, or 1.18 percent, to 4,226.38
The blue chip Dow Jones industrial average: Down 26.08, or 0.16 percent, to 16,276.69
And the widely watched Standard & Poor's 500 index: Down 9.08, or 0.49 percent, to 1,857.44
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.