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What Box's (Supposed) Delayed IPO Might Suggest

Wall St Bull by Asa Aarons.jpg

If it’s true that Box has delayed its IPO, then we have one thing to say. Told you so.

We called it last week when we couldn’t find any signs that the enterprise file-sharing (EFSS) startup had embarked on its pre-IPO road show. It was hard for us to believe the company’s CEO, Aaron Levie, could dazzle potential investors without making so much as peep.

After all, Levie is smart, funny and he’s even a former magician. Suffice to say, he knows how to work a crowd.

But he didn’t get to do that last night. Not even on Twitter.

Box filed the paperwork for an initial public offering in late March, and announced its intention to trade on the New York Stock Exchange under the symbol "BOX." But we wonder: Are the bulls getting anxious on Wall St.?

Update: Box Responds

A Box spokesperson responded to our request for comment with the following:

Our IPO has never had a set date. Since filing, we've planned on going when it makes the most sense for the market. That plan hasn't changed."

Silence is … Frustrating?

Silicon Valley’s boy wonder was forced to bite his tongue while a cadre of mostly well-respected journalists reported what seems to be the obvious: that Box had delayed its much anticipated IPO until late May or early June, depending who you want to believe.

The reason for the supposed delay?

Poor market conditions, according to most. The Wall Street Journal noted that other Enterprise SaaS firms have taken a beating since Box filed its S-1 in March. They point to Veeva whose stock has dropped about 36 percent and Workday, which lost 25 percent.

Others suggest Box may want to give its fans a little time to recover after seeing its “horrid” financials.

We recommended, in an article published late last month, that Box learn to frame its overspending story better — its strategy, after all, might be right on the money when it comes to winning customers while it’s in the, real or perceived, leaders seat.

How long it can retain that position is hard to predict because competing vendors like EMC Syncplicity are winning, or on their way to winning, bigger deals than Box.

Just last week, David Goulden, CEO of EMC Information Infrastructure Group, noted on his company's first quarter earnings call:

Syncplicity's trial implementations quickly go viral in the enterprise, but it also makes sense to host Syncplicity in a private cloud, driving storage demand as utilization gross. A great example is a tech company that started off with a 500-seat trial a year ago; bumped it to 6,000 just a few months later; is now at 50,000 seats and on their way to 150,000 seats."

And other vendors like Microsoft, and specifically its Office division, might soon be able to win the Enterprise customers Box is after by simply giving OneDrive storage away. It can probably afford to do this, even if it loses money on file-sharing, but gains Office 365 customers in the process.

There’s another rumor afloat as well, namely, that Box might be putting off its IPO while it hopes to be acquired.

Rebels with a Cause

It’s hard to imagine Levie and company going to work for someone like Microsoft (It and Apple are being suggested as acquirers. They’ve spent so many years rebelling against the establishment

That being said, Levie’s recent tweets suggest that he’s impressed with Microsoft’s new CEO Satya Nadella, but there’s likely a big gap between admiration and surrender.

One option that’s not often talked about is Dropbox as a suitor. Drew Houston and company have been trying to break into the EFSS space for a few years and the market perception continues to be that they’re not all that serious about it. A Box acquisition world change that.

It’s important to note that most of what’s written here is speculation. As far as we know, neither Box nor its investors have made any formal statements on the matter.

 

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